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Published January 25, 20242 min read

Official Statement: Terraform Labs and the Path to Bankruptcy Declaration

CoinMooner Team

In a recent news article, our team at Coinmooner focused on Terraform Labs announcement of bankruptcy. It's worth noting that in mid-March 2022, the prices of UST and Luna sharply declined, almost reaching $0, causing investors to lose $60 billion in an instant. Issues surrounding Terraform Labs and UST had been emerging long before the significant cryptocurrency market crash in early 2022.

As early as 2021, the U.S. Securities and Exchange Commission (SEC) initiated an investigation into the Terra Mirror protocol—a DeFi platform where synthetic stocks were issued and traded. The company's leadership was called upon to provide testimony to U.S. regulators.

Instead, according to legal documents, the company's CEO filed a lawsuit against the SEC, claiming that he cannot be summoned to court as he is a citizen of South Korea. Despite this, in interactions with the media, he denied receiving a court summons.

Currently, Terraform Labs, the creator of the TerraUSD stablecoin, has declared bankruptcy under Chapter 11 in the U.S. following the collapse of TerraUSD in 2022. The company sees this as a strategic move to overcome legal challenges while emphasizing its commitment to expanding offerings in the Web3 space.

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Despite facing significant financial difficulties and serious legal issues with the SEC, the management confidently states that they will continue to honestly and responsibly fulfill all financial obligations to their staff and reliable suppliers. This promise serves as a source of reassurance for numerous users and investors closely monitoring the company's future. During the complex bankruptcy process, the company has provided a detailed assessment of assets and liabilities, ranging impressively from $100 to $500 million.

Nevertheless, despite these incredible challenges, they are making every effort not to let them be the sole focus of attention. Currently, the Terraform Labs team is diligently working on sustaining growth, evident in recent successful acquisitions and the launch of innovative products. Inherent factors in the rapid development include legal disputes and extradition issues involving the company's co-founder, Do Kwon, in light of the TerraUSD collapse and its connection to the SEC case.

The Coinmooner team will closely monitor developments and promptly inform its readers on this matter. We also remind you that the Web3 space represents a unique concept, marking the beginning of a new era in finance known as cryptocurrencies and blockchain technology. However, we urge you to handle your data in this environment with care and always safeguard your finances using the best security practices.

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