ALBAWABA - Terraform Labs’ co-founder, the South Korean businessman Do Kwon, who has been arrested last year in Montenegro, after the collapse of his Singapore-based cryptocurrency firm, which caused the loss of about $40 billion from investors all around the globe, with rippling damage all around the Crypto industry, is currently filing for bankruptcy in the US under Chapter 11 in hopes for protection, which mentions the firm has between $100 million and $500 million in both approximate assets and liabilities.
TerraUSD (UST) was considered a stable coin, a cryptocurrency that ties their market value to an external asset to avoid the unpredictable volatility of the Crypto, with Luna as the main token to back up its target peg, however this UST-Luna system did not help Terraform when two months after Luna reached a peak price of $120 in March 2022, the token went crashing down with investors running away from it as quick as they can get.
While Do Kwon, listed in court as the owner of 92% of Terraform labs shares, still hopelessly tried to sustain the project’s life-cycle by relaunching it as Terra 2.0, it was still called a “Ponzi” scheme by different media outlet, and Kwon is left wanted by both the US and South Korea under charges of orchestration of a major fraud, he is currently held in Montenegro for travelling with a forged passport and awaiting extradition to the US.
Terraform Labs says that the bankruptcy filing will allow Terraform "to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission", adding that the firm plans to fulfill its financial responsibilities to suppliers and workers during the Chapter 11 case, and it will not require further financing to do so.
Today, Bloomberg reported that Terraform Labs is held responsible for selling unregistered securities, as US District Judge Jed S. Rakoff agreed this month. However, the judge rejected the company's claims that it had engaged in unregistered security-based swaps. According to Rakoff's decision, a jury trial is required for the SEC's fraud prosecution against Terraform.
A phone showing Luna token on Binance exchange (Shutterstock)
