Terraform Labs has filed for Chapter 11 bankruptcy in the U.S. amid ongoing litigation with the U.S. Securities and Exchange Commission (SEC). The company stated in its bankruptcy filing that “funds will be available for distribution to unsecured creditors.” Meanwhile, Terraform Labs co-founder Do Kwon is facing an upcoming SEC trial and extradition proceedings.
Terraform Labs Seeks US Bankruptcy Protection
Terraform Labs (TFL) filed for Chapter 11 bankruptcy protection in the United States on Sunday. The company and its co-founder Kwon Do-hyeong, aka Do Kwon, are in an ongoing litigation with the U.S. Securities and Exchange Commission (SEC) following the Terra blockchain’s implosion.
In its filing with the bankruptcy court in Delaware, Terraform Labs listed assets and liabilities in the range of $100 million-$500 million. Its estimated number of creditors lies between 100 and 199. “Funds will be available for distribution to unsecured creditors,” the filing states.
The company has pledged to meet all financial obligations to employees and vendors throughout the Chapter 11 proceedings without seeking additional financing, CNBC reported, adding that Terraform Labs also plans to continue expanding its Web3 offerings. The news outlet quoted the company as saying:
The filing will allow TFL 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 (SEC).
Do Kwon, charged by the SEC with defrauding investors out of billions of dollars following the collapse of luna cryptocurrency and stablecoin terrausd, will face a delayed trial. The SEC’s case against Terraform Labs and Kwon has been pushed back to April to facilitate Kwon’s extradition proceedings from Montenegro, where he remains after an arrest warrant was issued by South Korean authorities in late 2022. Separately, Daniel Shin, the other co-founder of Terraform Labs, was indicted in South Korea in April last year.
Terraform Labs CEO Chris Amani said in a statement: “We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways … we look forward to the successful resolution of the outstanding legal proceedings.”
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