Key Takeaways
- Terraform Labs, the company behind Luna cryptocurrency and TerraUSD stablecoin, has filed for bankruptcy in Delaware.
- Luna and TerraUSD stablecoin both collapsed, precipitating a crypto market turmoil in May 2022.
- According to his lawyer, Terraform co-founder Do Kwon could by extradited to the U.S. by March to face fraud charges related to his time at Terraform.
- Terraform's liabilities are estimated between $100 million and $500 million, with creditors including Cloudflare and the SEC.
Terraform Labs has filed for Chapter 11 bankruptcy in the United States following the collapse of the TerraUSD and Luna crypto assets.
Terraform Labs is the company behind the Luna and TerraUSD crypto assets, which both collapsed in spectacular fashion back in May 2022. The Luna crypto asset was used as part of the stability mechanism for the TerraUSD stablecoin, which was intended to operate on an algorithmic basis.
While the Terra ecosystem had plenty of notable proponents, such as Galaxy Investment Partners CEO Michael Novogratz, the system proved to be unsustainable in a time of heavy downward pressure on the crypto markets.
The collapse of the Terra blockchain ecosystem preceded the failure of a number of crypto institutions such as BlockFi and Celsius, which are still going through bankruptcy proceedings.
Terraform co-founder Do Kwon is wanted by authorities in South Korea and the United States for his role in the collapse of the Terra crypto network and allegations of fraud and other offenses. Bloomberg reported Kwon is currently being held in Montenegro, where he was found traveling with a fake passport. According to Kwon's lawyer, the Terraform co-founder may be extradited to the U.S. by March.
Terraform and Kwon are also facing charges from the U.S. Securities and Exchange Commission (SEC) for allegedly making an unregistered securities offering to American citizens. Due to this ongoing litigation, the SEC is listed as a creditor in Terraform's bankruptcy filing. Other creditors include web security and performance company Cloudflare and venture capital firm TQ Ventures.
According to court documents, Terraform's estimated number of creditors is between 100 and 199. Additionally, the assets and liabilities sides of the company's accounting books are both estimated to be between $100 million and $500 million.
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FAQs
The cryptocurrency company behind the crashed TerraUSD and Luna tokens has filed for bankruptcy in the US. Terraform Labs' tokens collapsed in May, losing $40bn of their value and contributing to the so-called "cryptocrash" of 2022.
What happened with Terraform Labs? ›
Terraform Labs reached a $4.47bn civil settlement with the US Securities and Exchange Commission, after being found liable by a jury for defrauding cryptocurrency investors who lost an estimated $40bn when the TerraUSD and Luna tokens collapsed in 2022, leading to a disastrous downturn that affected the entire crypto ...
When did Terraform file for bankruptcy? ›
Jan 21 (Reuters) - Terraform Labs (TFL), the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets in 2022, filed for Chapter 11 bankruptcy in the United States, according to court papers filed on Sunday.
Why did Terraform collapse? ›
Terra-Luna operated on a two-coin system protocol that lacked traditional collateral backing. Its collapse was likely triggered by an attack on its liquidity pool and was facilitated by flaws in the underlying blockchain framework.
Who owns Terraform Labs? ›
Terraform Labs is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins. It was co-founded by Do Kwon and Daniel Shin in 2018 in Seoul, South Korea.
What is the Terraform controversy? ›
The SEC accused Terraform and Kwon of deceiving investors about the stability of TerraUSD, which he designed to maintain a constant $1 price, and falsely claiming that Terraform's blockchain was used in a popular Korean mobile payment app.
Which company owns Terraform? ›
IBM. What is Terraform? Terraform, an open source “Infrastructure as Code” tool created by HashiCorp, allows programmers to build, change and version infrastructure safely and efficiently.
How many companies are using terraform? ›
Some of the companies that use Terraform include Dice, Intellibus, Oracle, JPMorgan Chase Bank, N.A., JPMorgan Chase & Co, EPAM Systems, Deloitte, Booz Allen Hamilton, CGI, Palo Alto Networks and many more. You can find a complete list of 54,442 companies that use Terraform on TheirStack.com.
Which crypto exchange files for bankruptcy? ›
In the news. On May 8, 2023, crypto exchange Bittrex announced that it was filing bankruptcy. This is the most recent crypto platform to file, but crypto companies FTX, Voyager, BlockFi, and Celcius also all filed for bankruptcy in 2022.
What happens with terraform destroy? ›
After running terraform destroy, we can observe that our state refreshes and Terraform outputs the resources that will be destroyed from our cloud environment. Like terraform apply, we are prompted to confirm these changes that will be made to our infrastructure. Confirm with a 'yes' to destroy the resources.
Terra (LUNA) Price Prediction 2030
| Year | Price |
|---|
| 2024 | $ 0.427671 |
| 2025 | $ 0.449054 |
| 2026 | $ 0.471507 |
| 2027 | $ 0.495082 |
1 more row| Do Kwon |
|---|
| Title | Co-founder and CEO of Terra |
| Spouse | Unknown |
| Children | 1 |
| Criminal information |
18 more rowsDo Kwon, a trash-talking entrepreneur from South Korea, called the cryptocurrency he created in 2018 “my greatest invention.” In countless tweets and interviews, he trumpeted the world-changing potential of the currency, Luna, rallying a band of investors and supporters he proudly referred to as “Lunatics.”
Who is the competitor of Terraform? ›
The best overall Hashicorp Terraform alternative is Red Hat Ansible Automation Platform. Other similar apps like Hashicorp Terraform are Jenkins, SaltStack, GitHub, and Azure Automation.
What happened to Terra Labs? ›
Terraform Labs is ceasing operations after a $4.47 billion settlement with the SEC, transferring control of the Terra blockchain to the community.
Who are the investors in Terra Labs? ›
Who are Terra Labs's investors? Norrsken VC and Cofounders Capital have invested in Terra Labs.
Why did Terra Classic crash? ›
Terra's spectacular crash
The collapse was centered around Terra's algorithmic stablecoin, UST (pegged against the dollar) and a run on Anchor deposits (Figure 3). 4 Total value locked is the US dollar value of digital assets “locked” or staked on particular blockchain network.
What is the penalty for Terraform Labs? ›
The Securities and Exchange Commission has fined the crypto industry $7.4 billion since 2013, according to a study published by Social Capital Markets. This year has been the largest on record due to the $4.47 billion fine levied against Terraform Labs.
Is Terraform still good? ›
It depends. Are you intending to provision a simple infrastructure to deploy a couple of apps? If that's the case, terraform is probably the best option for you.
