Terraform Labs, the company behind the failed TerraUSD stablecoin, filed for Chapter 11 bankruptcy protection in the U.S. on Sunday.
The Singapore-based company listed assets and liabilities between $100-500 million in Delaware court documents. This follows the stunning collapse of TerraUSD and its sister token Luna earlier this year which shook crypto markets globally.
Terraform Labs and its CEO Do Kwon face civil charges from the SEC alleging a massive $40 billion cryptocurrency fraud relating to TerraUSD. The stablecoin, designed to maintain a $1 peg via algorithms, lost almost all its value this May alongside Luna tokens.
The resulting wipeout of an estimated $40 billion in value led to wider volatility and sell-offs within digital asset markets. A federal judge recently delayed the SEC trial against Terraform and Kwon at their request.
The bankruptcy filing now adds a new dimension as Terraform attempts to chart a path forward after one of crypto’s biggest-ever blowups. Investigations and lawsuits over the failed experiment will likely drag on even as victims try to recover losses.