PODGORICA, MONTENEGRO – JUNE 16: Do Kwon is brought out of court on June 16, 2023 in Podgorica, Montenegro. Cryptocurrency TerraUSD and its companion token Luna collapsed in 2022, wiping about $40 billion from the cryptocurrency market. Do Kwon, the founder, was charged with fraud by American prosecutors after his arrest in Montenegro. (Photo by Filip Filipovic/Getty Images)
Filip Filipovic | Getty Images News | Getty Images
Terraform Labs, the company behind the stablecoin TerraUSD, which collapsed in 2022 and sent cryptocurrency markets into turmoil, filed for Chapter 11 bankruptcy in the United States, according to court documents filed on Sunday.
Singapore-based Terraform Labs listed assets and liabilities in the range of $100 million to $500 million in a filing with the Delaware bankruptcy court.
Terraform Labs said it will meet all financial obligations to employees and suppliers during the Chapter 11 case without the need for additional financing. There are also plans to continue expanding the Web3 offering.
“The filing will enable TFL to implement its business plan while managing ongoing litigation, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC),” Terraform Labs said in a statement.
The SEC's civil case against Terraform and Kwon is related to the collapse of TerraUSD, a “stablecoin” designed to maintain a constant price of $1, and the more traditional token Luna, which is closely tied to TerraUSD.
Recently, a federal judge postponed the SEC's trial of the company and its co-founder Do Kwon over an alleged $40 billion cryptocurrency fraud to allow for Kwon's extradition over his involvement.
Kwon and Terraform Labs were blamed for two cryptocurrencies whose collapse two years ago caused turmoil in crypto markets worldwide.
Both cryptocurrencies lost an estimated $40 billion or more when TerraUSD failed to maintain its $1 exchange rate in May 2022.