Terraform Labs, the creator behind the now-nonexistent stablecoin TerraUSD (UST) filed for bankruptcy protection in the United States. In a statement dated January 21, the company submitted for bankruptcy protection under Chapter 11 to the U.S. Bankruptcy Court for the District of Delaware. They’ve cited estimated liabilities and assets ranging from $100 million to $500 million.
According to the official statement from Terraform Labs, submitting bankruptcy documents is all part of TFL’s grand plan. They aim to juggle their business endeavors while navigating ongoing legal tussles, including with Singapore’s and U.S. court representatives.
The bankruptcy news came just four days after the U.S. Securities and Exchange Commission (SEC) graciously agreed to postpone the upcoming legal showdown over Kwon’s alleged shenanigans to March 25.
Accusations Against Terraform Labs and Kwon
The Securities and Exchange Commission first brought civil charges against Terraform Labs and Kwon in February 2023. Allegedly, both parties organized a “multi-billion dollar cryptocurrency securities fraud” involving tokens formerly known as UST and Terra (LUNA)
Terraform Labs and its leader, Do Kwon, are currently facing the prospect of a collective lawsuit in Singapore. As if that’s not enough, they’ve also got a front-row seat reserved in the USA for a legal showdown with the Securities and Exchange Commission (SEC) over the collapse of TerraUSD.
Plus, in December, Kwon and the Terraform Labs crew found themselves on the losing end of a battle over the status of LUNA and MIR. A wise American judge declared that, yes, they are officially securities.
Kwon’s Terra ecosystem collapsed in May 2022. After the company crumbled, the whereabouts of its co-founder remained unknown — until he was arrested in Montenegro in March 2023 for attempting to leave the country with fake travel documents.
Do Kwon Face Up to 40 Years in the South Korean Prison
In a statement filed on January 15th in the U.S. District Court for the Southern District of New York, the SEC declared that they’re “fully prepared, willing, and able to proceed” to keep the lawsuit against Kwon.
The court was supposed to kick off on January 29th, but Do decide to answer at a later date, requesting a delay no earlier than March 18th. Looks like he’s trying to avoid the SEC’s courtroom for as long as possible.
Both the US and South Korea are seeking Kwon’s extradition, leaving us to wonder if he’s about to get verdicts in both nations. If he goes back to South Korea, there are rumors that he could face a 40-year prison sentence. Kwon’s legal team is dealing with the challenges of extradition to the US while the Terraform Labs co-founder is still in Montenegro, where he was arrested in March 2023.
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