Terraform Labs Files Bankruptcy, TerraUSD Stablecoin Collapses

Terraform Labs, UST and LUNA crypto developer declared bankruptcy. (Photo; Doc. Yahoo News)

JAKARTA - Terraform Labs (TFL), a Singaporean company that developed a TerraUSD (UST) stablecoin and Terra Luna (LUNA) token, filed bankruptcy protection in the United States after the two collapsed in 2022. According to documents filed on January 21 at the Delaware bankruptcy court, TFL has assets and obligations between $100 million (Rp1.56 trillion) to US$500 million (Rp7.81 trillion).

In the filing, TFL also stated that there were about 100 to 199 creditors involved in this case. This move was taken by TFL just days after the United States Securities and Exchange Commission (SEC) trial against one of its founders, Do Kwon, was postponed by a federal judge. Kwon was charged with crypto fraud worth US$40 billion (Rp624 trillion), as reported by Reuters.

Do Kwon Diburu AS And South Korea

Kwon became a fugitive by US and South Korean authorities after the fall of the Terra/Luna ecosystem, which caused billions of dollars in losses to crypto investors and sparked a crisis in the digital asset sector in 2022.

Kwon is currently detained in Montenegro for being caught using a fake passport and is scheduled to be extradited to the US in mid-March to face charges of fraud.

TFL CEO Chris Amani issued an official statement regarding the bankruptcy filing:

"The Terra community and ecosystem have shown extraordinary resilience amid trials, and this action is necessary to allow us to continue working towards a common goal while solving the still unresolved legal challenges.

"We have overcome previous major challenges and, despite the small chances, the ecosystem survives and even grows in new ways after depreciation," he said, adding, "We hope for a successful completion of the ongoing legal process."

Change Of Name And Price

Court documents show that Kwon owns 92% of TFL's shares, while the rest is owned by South Korean businessman Daniel Shin. Terra's original (LUNA) was later renamed Terra Classic (LUNC), and a new chain was created using the name Terra (LUNA).

LUNA tokens fell 6% in recent hours to $0.623 (Rp9,730) at the time of writing. Prices spiked after rebranding in late May 2022, but have slumped 97% since the peak.

The old LUNC token also experienced a decline of about the same amount that day, down 5.5% to $0.000105 (Rp1.64) at the time of writing. TerraClassicUST, a stablecoin that was previously worth the same as the US dollar, is also worthless, after collapsing to 0.025 US dollars (Rp390).

TerraUSD and Luna's collapse in 2022 is one of the biggest events in crypto history, removing about $40 billion from the market and creating dominoes that destroyed many other digital asset projects and platforms.

One of the biggest victims was the Anchor Protocol, Terra-based loan and savings platform, which lost more than 90% market value in a day. Anchor Protocol is also facing lawsuits from its users claiming that the platform fails to provide a fixed interest of 20% per year as promised.

In addition, many leading crypto exchanges such as Binance, Coinbase, and Kraken have also suffered disruptions and losses due to the collapse of TerraUSD and Luna. Binance, for example, announced that it would compensate customers affected by the incident for $10 million.