News - Terraform Labs files for bankruptcy

By Mike Hesp

Terraform Labs files for bankruptcy

Terra Luna (LUNA)
Terra Luna Classic (LUNC)

Meanwhile, Terra founder Do Kwon is in Montenegro awaiting extradition to the US. He is being charged there by the SEC with fraud.

According to documents of the Delaware Bankruptcy Court, US, did Terraform Labs on Jan. 21 bankruptcy requested. According to the documents, the company has debts of up to $500 million.

Terraform Labs was in charge of developing the algorithmic stablecoin UST. When it lost its peg to the U.S. dollar in May 2022, it set in motion a vicious spiral that led to the demise of sister project Terra (LUNA) and thus stablecoin.

Terra's CEO Do Kwon fled in the aftermath of the collapse, but was arrested in Montenegro for forging a passport. He now awaits extradition to the U.S., where he is charged with fraud.

The U.S. Securities and Exchange Commission has been conducting a proceedings against Terraform Labs and Do Kwon. However, this was recently postponed due to poor weather conditions in the US. The company is also facing a lawsuit in Singapore.

After Kwon's escape, the project broke up. The Terraform team continued LUNA in a new form. The original coin became "LUNA Classic" (LUNC).

LUNA, LUNC and the stablecoin UST experienced repeated price jumps during developments, giving some investors hope for a rebound.

Since news of the bankruptcy, however, LUNC and LUNA have fallen five percent.

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