Do Kwon’s Terraform Labs has initiated the process of Chapter 11 bankruptcy protection in the United States; the firm claims to have between $100 million and $500 million in estimated assets and liabilities.
A January 21 filing with the United States Bankruptcy Court for the District of Delaware stated that the company had petitioned for Chapter 11 bankruptcy protection, citing estimated liabilities and assets ranging from $100 million to $500 million.
Chris Amani, CEO of Terraform Labs, said in a separate statement, “The Terra community and ecosystem have demonstrated unprecedented resilience in the face of adversity; this action is necessary to allow us to continue working toward our collective goals while resolving the outstanding legal challenges.”
“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.”
Based on the court filing, the estimated liabilities and assets of the defunct firm range from $100 million to $500 million, with the latter amounting to the former.
Four days before the bankruptcy filing, the U.S. Securities and Exchange Commission (SEC) granted Kwon’s legal team a request to prolong the proceedings by postponing his forthcoming fraud trial until March 25.
The Terra ecosystem of Kwon failed in May of 2022. The location of the firm’s co-founder remained unknown until March 2023, when he was apprehended in Montenegro on suspicion of attempting to exit the country using forged travel documents shortly after the firm imploded.
In February 2023, the SEC initially lodged civil charges against Terraform Labs and Kwon. An alleged “multibillion-dollar crypto asset securities fraud” involving the tokens formerly referred to as both parties coordinated UST and Terra (LUNA).
South Korea and the United States are both pursuing Kwon’s extradition. Speculation has increased regarding the possibility that Kwon will serve multiple sentences in both nations.
In the nation where the preponderance of his alleged crimes occurred, the extradition of Kwon to South Korea could result in a forty-year prison term.
