Singapore-based Terraform Labs Pte. Ltd. has filed for voluntary bankruptcy in Delaware.
The Board of Directors of the company has decided, after consultation with the company’s management and legal and financial advisors, that it is desirable and in the interest of the company, its creditors and other interested parties that an application be submitted by the company seeking relief in accordance with provisions of chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware.
The Board of Directors had the opportunity to consult with the company’s management and legal and financial advisors to consider and consider the strategic alternatives available to the Company.
At a previous meeting, the Board of Directors authorized and approved the appointment of John S. Dubel as an independent member of the Board of Directors.
The Board of Directors reviewed and had the opportunity to ask questions regarding the material presented by management and the company’s legal and financial advisors regarding the company’s liabilities and liquidity, the strategic alternatives available to it and the effect of above in the company’s business.
In February 2023, the Securities and Exchange Commission (SEC) charged Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset scam involving an algorithmic stablecoin and other cryptocurrency securities.
According to the SEC complaint, from April 2018 until the system collapsed in May 2022, Terraform and Kwon raised billions of dollars from investors by offering and selling an interconnected suite of crypto-assets, many in unregistered transactions. These included “mAssets”, security-based exchanges designed to pay returns mirroring the stock prices of US companies, and Terra USD (UST), a crypto-security referred to as an “algorithmic stablecoin” that supposedly retained its peg to USD convertible into another of the defendants’ crypto-asset securities, LUNA.