Terraform Labs Files for Bankruptcy in the US Amid Legal Challenges, Emphasizes Business Continuity

Discover how Terraform Labs is navigating its legal and financial challenges by filing for Chapter 11 bankruptcy in the US.

Learn about their commitment to business continuity, plans for the future, and the potential impact on the wider cryptocurrency market in this insightful article.

Applies for Chapter 11 Bankruptcy in the US Following LUNA and UST Crash

Terraform Labs, known for the development of LUNA and UST (now LUNC and USTC), announced on January 22, 2024, that they have filed for Chapter 11 bankruptcy in the United States.

After the May 2022 crash of their virtual currency LUNA, Terraform Labs launched a new chain and token, Terra (LUNA), rebranding the original LUNA and UST as LUNC and USTC.

Legal Hurdles and Operational Continuation

Do Kwon, the co-founder of Terraform Labs (TFL), arrested in Montenegro in March 2023, faced potential class-action lawsuits in Singapore and legal issues with the U.S. Securities and Exchange Commission (SEC).

The bankruptcy filing is intended to resolve these legal procedures while continuing operations and supporting the Terra community. This move allows them to carry out their business plans while addressing ongoing legal processes.

TFL highlighted in their official announcement their commitment to continue operations. They stated that during the Chapter 11 period, they intend to fulfill all financial obligations to employees and vendors without the need for additional fundraising.

TFL has acquired 'Pulsar Finance,' a cross-chain portfolio management and analysis firm, and announced 'Station v3,' a cross-chain wallet.

They plan to continue expanding their software suite, providing convenient and intuitive products for the entire Cosmos community.

Financial Assets and Liabilities Between $100 Million to $500 Million

According to documents filed with the Delaware Federal Bankruptcy Court, Terraform Labs' liabilities range between $100 million to $500 million, with an estimated equal amount in assets.

The company's shares are primarily owned by Do Kwon (92%), with the remaining 8% held by co-founder Daniel Shin.

Chris Amani, CEO of Terraform Labs, stated in an official declaration, "Terra has overcome significant challenges in the past and we look forward to resolving the remaining legal issues."

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.

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 successf l resolution of the outstanding legal proceedings.

Crypto.com's Possible Delisting of LUNC?

Recent reports suggest that the cryptocurrency exchange Crypto.com might delist LUNC on February 15, 2024, as indicated in an email sent to users.

While there has been no official announcement regarding the delisting of LUNC, multiple international media outlets have reported that Crypto.com has confirmed the news.

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