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- 1 Terraform Labs submitted a Chapter 11 Bankruptcy in Court.
- 2 The plan is to revive the platform and resume working towards goals.
On January 21, 2024, Terraform Labs, the company behind the TerraUSD (UST) stablecoin filed for Chapter 11 bankruptcy protection in the District of Delaware, United States. Additionally, the platform currently holds assets of over $100 to $500 Million. The same was confirmed by the court papers filed.
Why Did Terraform Labs File for Chapter 11 Bankruptcy?
Terraform Labs filed for Chapter 11 bankruptcy and detailed assets of over $100-$500 Million. Additionally, the goal is to meet all the financial commitments to vendors and employees during the Chapter 11 case without needing extra finance.
“The move is substantial for the company as well as for the investors and will allow individuals to resume work towards the goals without any legal challenges”, said Chris Amani, Terraform Labs CEO.
Furthermore, the platform is all set to expand its roots in the Web3 universe and come with some innovations.
Terraform Lab’s TerraUSD failed to uphold its $1 peg in May 2022 resulting in the drop of LUNA and LUNC. Both the crypto lost over $40 Billion or more, stirred the crypto market adversely. These traditional tokens are closely connected with the TerraUSD.
On February 16, the SEC charged Terraform Labs and its co-founder Do Kwon with producing Billions of dollars in digital asset securities scams. Moreover, the platform is witnessed for offering unregistered securities through UST and LUNA tokens.
Additionally, Terraform Labs and Do Kwon, the co-founder of the platform were held accountable for the situation.
Judge Jed S. Rakoff agreed that the organization and its founder sold unlisted securities and broke the securities laws.
At the time of filing bankruptcy protection, Terraform Labs has creditors between 100 to 199. Also, the majority of the company shares are held by Do Kwon whereas the remaining shares are held by Daniel Shin, the South Korean entrepreneur.
However, the company is trying to revive under the supervision of new CEO Chris Amani.
“The Terra community and environment have shown remarkable resilience in the adverse situation and require to continue working towards goals. Resolving the legal challenges will help in reviving the smooth functioning of Terraform Labs”, said Amani.
Where are LUNA and LUNC Standing Now?
The current price of Terra LUNA is $0.6254, a decline of over 4.7% in the past 24 hours with $34.4 Million. The market cap of LUNA is around $399.5 Million. On the other hand, Terra Classic LUNC toke’s current price is $$0.0001055, a drop of 5.1% in the past 1 day with a 24-hour volume of $30.7 Million. The market cap of LUNC is $611.1 Million.
Disclaimer
This article is for informational purposes only and does not provide any financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.