Terraform Labs Files for Bankruptcy Following Crypto Market Turmoil

Terraform Labs, the crypto company responsible for the significant market disruption with the collapse of its TerraUSD and Luna stablecoins, has officially filed for Chapter 11 bankruptcy protection. According to reports from Bloomberg, the estimated assets and liabilities of the crypto firm fall within the range of $100 million to $500 million, with the number of creditors estimated between 100 and 199. Co-founder and former CEO Do Kwon, holding a majority stake of 92 percent, is listed as the primary shareholder, with a registered address in Singapore, where the company is incorporated.

Do Kwon, currently in custody following his arrest in Montenegro for using forged passports last March, is awaiting extradition to the U.S. to face securities fraud charges, likely to occur by mid-March. Kwon is also wanted in South Korea for similar charges, prompting him, his family, and key Terraform Labs personnel to flee to Singapore between April and May 2022. Despite Kwon’s denial of being “on the run” before Interpol issued a “red notice” in September that year, the subsequent discovery of fake passports suggests otherwise.

Kwon’s situation mirrors the fate of other notable figures in the crypto industry’s downfall, including Sam Bankman-Fried of FTX and former Celsius Network chief Alex Mashinsky. In a separate development, Coinbase is actively contesting the SEC’s accusation of illegally operating an unregistered national securities exchange, broker, and clearing agency. Analysts, such as Bloomberg’s Elliott Stein, speculate that Coinbase might secure full dismissal of charges either by the current quarter or by the end of Q2.

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