Terraform Labs, Creator of TerraUSD, Enters Chapter 11 Bankruptcy

Emma Grant

A company called Terraform Labs, which is based in Singapore and makes the stablecoin TerraUSD, has filed for Chapter 11 bankruptcy in the US. In 2022, the company went out of business and shook up the coin markets. On January 21, 2024, the company filed for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.

In the court document, Terraform Labs stated its assets and debts that were worth between $100 million and $500 million. During the Chapter 11 case, the company said it would pay all of its bills to suppliers and workers without needing any extra money.

Terraform Labs is currently having legal problems, such as a case involving an agent in Singapore and a case in the U.S. involving the Securities and Exchange Commission (SEC).

The SEC’s legal case against Terraform and its co-founder, Do Kwon, has to do with the failure of TerraUSD, a “stablecoin” that was supposed to keep the price of $1 stable, and the more traditional token Luna, which was closely linked to TerraUSD.

With this filing, Terraform Labs will be able to carry out its business plan while dealing with ongoing legal problems. The company wants to keep adding to its Web3 services.

Through the filing, Terraform Labs said it would be able to “execute on its business plan while navigating ongoing legal issues, such as representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC).”

When TerraUSD failed to keep its $1 price in 2022, it had a big effect on the cryptocurrency markets. It is thought that both Bitcoin and Ethereum lost at least $40 billion.

Terraform Labs has filed for Chapter 11 bankruptcy. This will likely have an impact on the cryptocurrency market as investors and traders try to figure out what this means for the company’s finances.

Finally, Terraform Labs’ decision to file for Chapter 11 bankruptcy in the US is a big change in the cryptocurrency business. As the Chapter 11 case goes on, the legal problems of the company and the effects of TerraUSD’s demise on the market will be closely watched.

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Emma Grant is a highly regarded legal news expert with a deep understanding of constitutional law and its implications in contemporary society. With her extensive background in legal journalism and analysis, Emma Grant has established herself as a trusted authority on the intersection of law, policy, and society.