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Terraform Labs, the company behind the failed cryptocurrencies TerraUSD (UST-USD) and Luna (LUNA-USD), has filed a voluntary petition for Chapter 11 bankruptcy in the U.S.
TerraUSD (UST-USD), along with its sister token Luna (LUNA-USD), had collapsed in 2022 after the stablecoin lost its peg to the U.S. dollar, with both cryptos losing around $40B.
Terraform listed assets and liabilities worth around $100M-$500M each, according to a court filing. It intends to meet all financial obligations to staff and vendors during the Chapter 11 proceedings without additional financing, Reuters reported.
“The filing will allow Terraform 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,” the company said, adding that it plans to continue expanding its Web3 offerings.
Terraform is expected to face a class-action lawsuit in Singapore from investors claiming they lost a combined $57M during TerraUSD’s (UST-USD) collapse.
Terraform also faces fraud charges brought on by the U.S. SEC, which the company sought to dismiss by arguing that TerraUSD (UST-USD) didn’t fall under the regulator’s purview as it is not a security.
However, a U.S. judge late last year ruled that Terraform failed to register Luna (LUNA-USD) and Mirror Protocol USD (MIR-USD), another crypto it issues, as securities. Terraform repeatedly asserted that TerraUSD (UST-USD) and other tokens it issues are not securities.
