Terraform Labs, the parent company of TerraUSD, has filed for Chapter 11 bankruptcy protection in the United States. This move comes as the company faces significant legal challenges and aims to maintain operations while addressing these issues.
The co-founder of Terraform Labs, Do Kwon, submitted the official request for bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. The filing is seen as a necessary measure to navigate the pending legal matters and allow the company to continue collaborating with the Terra community.
Terraform Labs CEO, Chris Amani, emphasized the resilience of the Terra community and its ecosystem in the face of adversity. He stated that the bankruptcy protection would safeguard their ability to work together on infrastructure, innovative tools, products, and additional ecosystem support.
Reports indicate that the insolvent firm has projected assets and obligations ranging from $100 to $500 million. The bankruptcy filing will provide Terraform Labs with the legal framework to address these financial matters and restructure its operations.
This development comes after the Appellate Court at Podgorica in Montenegro overturned a previous ruling by the High Court regarding Do Kwon’s potential extradition. The decision cited issues in the legal process and a lack of clear reasoning.
In terms of price action, both Terra Classic (LUNC/USD) and Terra (LUNA/USD) were down 5% at the time of writing, trading at $0.0001052 and $0.62, respectively. These figures highlight the potential impact of the bankruptcy filing on the company’s cryptocurrency assets.
It is important to note that this article was partially produced with the help of Benzinga Neuro and reviewed by Benzinga editors.
