Cryptocurrency agency Terraform Labs recordsdata for chapter in US

The cryptocurrency firm behind the crashed TerraUSD and Luna tokens has filed for chapter within the US.

Terraform Labs’ tokens collapsed in May, dropping $40bn of their worth and contributing to the so-called “cryptocrash” of 2022.

Co-founder Do Kwon is at present in jail in Montenegro after having been discovered responsible of forging paperwork.

He has been charged with defrauding traders by US regulators and is awaiting extradition.

He additionally faces fraud prices in South Korea, his native nation, so could possibly be extradited there.

A 3rd authorized case is ongoing in Singapore, the place the corporate is registered.

Terraform Labs’ Luna token got here to prominence in December 2021, when its worth started to rise from $5 to a excessive of $116 in April 2022.

Fans of Luna turned often called “Lunatics”, with Mr Kwon known as their “king”.

Then all of the sudden, on 9 May 2022, it collapsed, dropping 99% of its worth in simply 48 hours.

It was algorithmically linked to its sister coin, TerraUSD, which was a stablecoin, which means it was meant to remain at at a worth of $1.

But the worth of TerraUSD plummeted to about $0.02 – which then brought on the Luna coin to nosedive.

The crash led to shockwaves across the crypto market, with traders pulling billions of {dollars} from different cryptocurrencies in concern of an identical crash.

It is estimated that about $400bn was wiped from the worth of different cryptocurrencies similar to Bitcoin.

Announcing the chapter submitting, Terraform Labs chief government Chris Amani mentioned: “This action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding.”

Terraform “intends to meet all financial obligations to employees and vendors during the Chapter 11 case and does not require additional financing to do so,” the corporate mentioned in a press release.

A Chapter 11 chapter signifies that Terraform Labs can proceed to do enterprise.

The agency gives blockchain and different Web3-related companies.

The chapter paperwork, filed in Baltimore, listing Terraform as having between $100m and $500m in belongings.

They additionally say Do Kwon owns 92% of the shares of the corporate, together with his co-founder Daniel Hyunsung Shin proudly owning the opposite 8%.

Mr Kwon was arrested in Montenegro in March 2023 as he tried to board a airplane to Dubai.

Three months later, he was discovered responsible of forging paperwork – which he denied – and sentenced to jail.

The former finance officer of Terraform Labs, Han Chang-joon, was additionally sentenced to jail after being discovered responsible of the identical prices.

According to Reuters, police had discovered doctored Costa Rican passports and a separate set of Belgian passports amongst their baggage.

In November 2023 a courtroom in Montenegro permitted his extradition, however was but to determine whether or not it might be to South Korea or the US.