Disgraced crypto entrepreneur Do Kwon and his firm Terraform Labs are held responsible for the now-defunct stablecoin TerraUSD (UST) collapse, which has caused turbulence in the crypto market. Much to the digital asset sector’s surprise, the firm has filed for bankruptcy protection in the United States.
Terraform Labs Seeks Bankruptcy Protection
The court filing states that the estimated liabilities and assets of Terraform Labs range from $100 to $500 million.
Assets and Liabilities
On January 21, the company filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, citing between $100 and $500 million in estimated assets and liabilities.
“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.” Chris Amani, the CEO of Terraform Labs, said.
The bankruptcy was filed just four days after the U.S. SEC agreed to postpone Do Kwon’s upcoming trial after receiving a request to delay the proceedings from Kown’s legal team. He was up for a fraud trial, which was rescheduled for March 25.
Do Kwon’s Trial
Kwon Do-hyung, commonly known as Do Kwon, is a South Korean former businessman and software engineer. His Terra Money ecosystem collapsed in May 2022.
Not long after the collapse, the whereabouts of its co-founder, Do Kwon, remained unknown until he was arrested in Montenegro in March 2023.
He was caught attempting to use falsified travel documentation to leave the country. Do Kwon is currently sought by both the U.S. and South Korea for his extradition. Growing rumors have suggested that Kwon might receive multiple sentences in both nations.
It is believed that, if he is extradited there, he might get a 40-year prison term in South Korea as he has committed the most of his crimes.
Charges against Terraform Labs
The SEC first filed civil lawsuits against Terraform Labs and Kwon in February 2023. The two parties were previously accused of running a “multibillion-dollar cryptocurrency fraud” involving the symbols known as UST and Terra (LUNA).