Terraform Labs Pte, co-founded by Do Kwon, has filed for Chapter 11 bankruptcy protection in the United States.
The company’s assets and liabilities are valued at between $100 million and $500 million and its creditors number between 100 and 199, according to court documents filed in Delaware on Sunday.
Kwon is wanted in both South Korea and the US following the collapse of his TerraUSD stablecoin and Luna token in 2022, resulting in a loss of at least $40 billion and exacerbating a $2 trillion crypto market crash. These events triggered a wave of bankruptcies and exposed deep risks in the digital asset market.
A former crypto tycoon is in custody in Montenegro for using a fake passport. Kwon is expected to be extradited to the United States by mid-March to face charges of masterminding major fraud, his lawyer said earlier this month.
Court documents list Kwon as the owner of 92% of Terraform Labs shares. The remaining shares belong to another South Korean entrepreneur, Daniel Shin.
“The Terra community and ecosystem have demonstrated incredible resilience in the face of adversity, and this decision is necessary to continue working toward our shared goals while we resolve outstanding legal issues,” Terraform Labs CEO Chris Amani said in a statement.
In addition to the fraud allegations, Kwon and Terraform Labs are also facing a lawsuit from the Securities and Exchange Commission.
Last month, U.S. District Judge Jed S. Rakoff ruled in the regulator’s favor, agreeing that Terraform Labs was liable for selling unregistered securities but dismissing allegations that the company engaged in transactions in unregistered security-based swaps. In his decision, Rakoff said the SEC’s fraud case against Terraform should be tried by a jury.
