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Terraform Labs, the pioneering force behind the embattled cryptocurrencies TerraUSD (UST-USD) and Luna (LUNA-USD), has made the gut-wrenching decision to file for Chapter 11 bankruptcy in the United States.
The tumultuous downfall of TerraUSD (UST-USD), accompanied by its kin token Luna (LUNA-USD), unraveled in 2022, as the stablecoin lost its tight grip on the U.S. dollar, leading to a staggering combined loss of approximately $40 billion for the once-promising cryptos.
The court filing attributed assets and liabilities hovering in the range of $100 million to $500 million for Terraform Labs, as per disclosed information. The company firmly commits to fulfilling all financial obligations to its dedicated staff and invaluable vendors throughout the complex labyrinth of Chapter 11 proceedings, without relying on supplementary funding, as confirmed by Reuters.
Underlining the company’s stance, it declared, “The filing will empower Terraform to strategically execute its business roadmap while deftly navigating the turbulent waters of ongoing legal battles, including ongoing representative litigation in Singapore and contentious U.S. litigation intertwined with the Securities and Exchange Commission,” affirming its ambition to forge ahead with bolstering its Web3 portfolio.
The corridors of anticipation resonate with the impending class-action lawsuit in Singapore, wherein investors unite to assert their combined loss of $57 million sustained during TerraUSD’s (UST-USD) dizzying descent.
In a dramatic twist, Terraform Labs faces the looming specter of fraud charges hurled by the formidable U.S. Securities and Exchange Commission. The company fiercely endeavors to refute the allegations, contending that TerraUSD (UST-USD) does not fall within the regulator’s jurisdiction, categorically denying its status as a security.
However, a pivotal turning point transpired last year when a U.S. judge ruled against Terraform, affirming its failure to register Luna (LUNA-USD) and Mirror Protocol USD (MIR-USD), another cryptographic creation, as securities. Terraform adamantly iterated its stance that TerraUSD (UST-USD) and its sibling tokens remain non-securities.
The Unfolding Saga of Terraform Labs
