Terraform Labs, the company behind failed stablecoin TerraUSD, has filed for bankruptcy as it faces lawsuits from the Securities and Exchange Commission (SEC) and in Singapore.
The Singapore-based crypto firm filed for Chapter 11 bankruptcy protection Sunday in Delaware, according to court documents shared with The Hill. Terraform Labs claimed assets between $100 million and $500 million and liabilities of the same monetary range.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” Terraform Labs CEO Chris Amani said in a statement.
“This step protects our ability to continue working with the community on infrastructure, innovative tools and products, and other ecosystem support.”
Terraform Labs and its founder, Do Kwon, are facing legal and financial peril for the company’s role in the cryptocurrency crash of 2022.
The company developed the Terra blockchain, which supported the cryptocurrency Luna and a stablecoin called USDTerra. While Luna’s price was intended to rise and fall akin to other cryptocurrencies, USDTerra was supposed to stay equivalent with the U.S. dollar.
Both coins, however, collapsed in May 2022 amid a broader decline in crypto prices, wiping out more than $44 billion in Luna and USDTerra investments. Both the company and Kwon are facing legal action from the SEC and in Singapore.
The Terra network and Kwon grew in prominence as crypto boomed and the industry began flexing its muscle. Terra had inked a five-year, multimillion-dollar sponsorship deal with the Washington Nationals baseball team just three months before its collapse.
“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,” Amani said in a statement.