Terraform Labs, the company responsible for a staggering $40 billion market value loss due to the collapse of its TerraUSD and Luna stablecoins, has officially filed for Chapter 11 bankruptcy protection as reported by Bloomberg on Sunday.
The crypto firm’s estimated assets and liabilities fall within the range of $100 million to $500 million, with the number of creditors estimated to be between 100 and 199. Co-founder and former CEO Do Kwon, who holds the majority share at 92 percent, is currently in jail awaiting extradition to the US after his arrest in Montenegro last March for traveling with forged passports. His address is registered in Singapore, where the company is incorporated.
Expected to face securities fraud charges in the US, Kwon is also wanted in South Korea for similar charges. He, along with his family and key Terraform Labs personnel, fled to Singapore between April and May 2022. Despite denying being “on the run” before being placed on Interpol’s “red notice” list in September that year, the discovery of fake passports suggests otherwise. Kwon is likely to share a fate similar to other prominent figures in the crypto industry downturn, including Sam Bankman-Fried of FTX and former Celsius Network chief Alex Mashinsky.
In the midst of these developments, Coinbase is actively contesting SEC accusations of operating an unregistered national securities exchange, broker, and clearing agency. Bloomberg analyst Elliott Stein suggests that Coinbase may secure a full dismissal of these charges as early as this quarter or by the end of Q2. The legal battle continues to unfold amidst the evolving landscape of the cryptocurrency market.
