KEY POINTS
- Terraform Labs officially started Chapter 11 bankruptcy proceedings in the U.S.
- The firm has an estimated liabilities and assets ranging between $100 million and $500 million
- The $40 billion fraud case against TFL and Kwon is associated with the spectacular collapse of the company in May 2022
Terraform Labs (TFL), the blockchain firm behind the so-called decentralized algorithmic stablecoin TerraUSD (UST), officially started Chapter 11 bankruptcy proceedings in the United States.
The cryptocurrency firm, which played a pivotal role in the tumultuous events that shook cryptocurrency markets in 2022, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
In its filing, the company has provided a glimpse into its financial position, with estimated liabilities and assets ranging between $100 million and $500 million.
The decision to pursue Chapter 11 bankruptcy is described as a strategic maneuver aimed at ensuring the continuity of the firm's operations and its continued support for the Terra community and ecosystem.
This move is seen as critical in enabling the company to execute its business plan, while simultaneously navigating a complex legal landscape, including ongoing representative litigation in Singapore and legal proceedings involving the U.S. Securities and Exchange Commission (SEC).
Furthermore, the company has made a commitment to fulfill all financial obligations to its employees and vendors throughout the Chapter 11 case, emphasizing that no additional financing is required to meet these obligations.
Despite the challenges it faces, the firm has reaffirmed its dedication to expanding its Web3 offerings. It recently acquired Pulsar Finance, a prominent cross-chain portfolio manager and data provider.
Additionally, the launch of Station v3, the firm's cross-chain wallet, is set to facilitate seamless multi-chain token swaps, gas fee token top-ups, and advanced cross-chain transaction history.
"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," TFL CEO Chris Amani, said in a press release sent to International Business Times.
"This step protects our ability to continue working with the community on infrastructure, innovative tools and products, and other ecosystem support. 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," he added.
Last week, Judge Jed Rakoff moved the start date of the SEC v. Terraform Labs and Kwon $40 billion fraud case trial to March 25 from the initial Jan. 29 start date, following an appeal from the crypto mogul's camp.
"The Court will indulge his counsel's request given their express recognition that the trial cannot be further postponed. Accordingly, the trial is hereby moved to March 25, 2024, at 9:30 AM.1 No further requests from any party for any further adjournment will be entertained," the court filing read.
The case is associated with the spectacular collapse of Terraform Labs when its so-called decentralized algorithmic stablecoin, known as UST, de-pegged from the dollar resulting in substantial losses for investors running into billions of dollars.
