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Do Kwon's Terraform Labs Files for Bankruptcy

LUNA founder Do Kwon could be extradited to the US as soon as March

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Terraform Labs is filing for bankruptcy twenty months after its stablecoin, TerraUSD (UST), crashed to zero.

Founded by Do Kwon, the Singapore-registered firm is thought to be responsible for the US$40 billion cryptocurrency crash that ensued after UST de-pegged and LUNA became worthless.

On 22 January 2024, Terraform Labs revealed it filed for Chapter 11 bankruptcy in Delaware. The firm said the move was “a strategic step that will enable it to continue its operations and support litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission.”

Terraform Labs also vowed to “meet all financial obligations to employees and vendors during the Chapter 11 case” without requiring additional financing. The firm's assets and liabilities range between $100 million and $500 million.

“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working towards our collective goals while resolving the legal challenges that remain outstanding,” Chris Amani, chief executive of Terraform Labs, said.

CZ, SBF & Do Kwon: The Tricky Case of Extraditing Crypto Villains
LUNA founder Do Kwon will be extradited to the US whilst ex-Binance CEO CZ is prohibited from flying to the UAE.

“We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg. We look forward to the successful resolution of the outstanding legal proceedings,” Amani added.

Do Kwon, who owns 92% of Terraform Labs, is being held in custody in Montenegro for travelling on a fake passport. The SEC has agreed to postpone his trial from 29 January until April to facilitate his extradition to the US in March.