Terraform Labs to Reimburse Crypto Losses After Terra Collapse

Terraform Labs, the company behind the failed LUNA cryptocurrency and its algorithmic stablecoin TerraUSD (UST), is set to launch a claims portal for individuals who lost funds during the collapse of its ecosystem in 2022.

The portal, which will open on March 31, is designed to compensate those who suffered losses of at least $100.

This move comes after a Delaware court approved Terraform Labs’ plan to wind down its operations. The ruling was seen as a positive step, allowing the company to avoid further legal battles over investor losses. Additionally, Terraform Labs reached a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC) in June 2024.

To file a claim, individuals must submit their documentation via the portal by April 30 at 11:59 PM ET. Claims below $100 will not be considered. Claimants have the option to provide two types of evidence: manual evidence, such as transaction logs and screenshots, and preferred evidence, which includes read-only API keys and is considered more accurate. The company noted that manual evidence may lead to longer review times and could be rejected if preferred evidence is available.

Terraform Labs has estimated that it could pay between $184.5 million and $442.2 million to eligible claimants, though the final amount remains uncertain. Before its collapse, the company managed a $45 billion ecosystem, which included its algorithmic stablecoin and LUNA token. The downfall of Terraform Labs sent shockwaves through the crypto space, severely impacting the value of Bitcoin, which dropped 37% in just one month.

In the wake of the collapse, Do Kwon, the founder of Terraform Labs, was arrested in Montenegro and extradited to the United States, where he faces multiple criminal charges. His court hearing is scheduled for April 10, with prosecutors currently reviewing new evidence.