Terraform files for bankruptcy after crypto collapse

Singapore-based Terraform Labs, the company behind the failed stablecoin TerraUSD, filed for Chapter 11 bankruptcy protection in Delaware on Sunday with assets and liabilities estimated between $100 million and $500 million.

The bankruptcy allows Terraform Labs to continue operations while navigating ongoing legal issues over the spectacular collapse in 2022 of its two signature cryptocurrencies, TerraUSD and Luna, which wiped out an estimated $40 billion in investor funds globally.

“The filing will allow TFL to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission,” the company said in a statement.

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Terraform faces a civil fraud lawsuit from the SEC over the debacle as well as a criminal investigation in South Korea, where police have requested the extradition of Terraform co-founder Do Kwon from Singapore.

Despite the legal troubles, Terraform says it plans to meet all obligations to employees and vendors during bankruptcy and continue expanding Web3 offerings. The company’s Chapter 11 filing lists assets and liabilities ranging between $100 million and $500 million.