Terraform Labs (TFL), the entity behind the stablecoin TerraUSD, has recently submitted documents for Chapter 11 bankruptcy in the United States. The court filing in Delaware revealed assets and liabilities in the $100-$500 million range.
Terraform Labs (TFL) Financial Commitments Amid Bankruptcy
Amidst the bankruptcy proceedings committed to meeting all financial obligations to employees and vendors. Interestingly, the company emphasizes that it won’t require additional financing and plans to persist with its Web3 offerings expansion.
In an official statement, Terraform Labs clarifies that the Chapter 11 filing is a strategic move to execute its business plan while navigating ongoing legal battles. These legal proceedings involve representative litigation in Singapore and a case with the U.S. Securities and Exchange Commission (SEC).
The SEC’s civil case is linked to the collapse of TerraUSD, a stablecoin designed to maintain a constant $1 value, and the associated traditional token Luna. A recent development sees a federal judge postponing the trial against Terraform Labs and co-founder Do Kwon, accused of a $40 billion cryptocurrency fraud. The delay is to facilitate Kwon’s extradition for his alleged involvement.
Terraform Labs and Kwon were implicated in the collapse of two cryptocurrencies, causing significant turbulence in global cryptocurrency markets two years ago. The estimated losses exceeded $40 billion when TerraUSD failed to uphold its $1 peg in May 2022.
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