KUALA LUMPUR – Embattled Singaporean company Terraform Labs, which was co-founded by South Korean Kwon Do-hyung, commonly known as Do Kwon, has filed for bankruptcy in the US today amid fraud investigations.
Terraform Labs, which started stablecoin TerraUSD, said this “enables it to continue its operations and support for the Terra community and ecosystem” pending investigations in Singapore and by the US Securities and Exchange Commission (SEC).
Terraform Labs said it intended to meet all financial obligations to employees and vendors during the Chapter 11 case and did not require additional financing to do so.
The firm had previously listed assets and liabilities between US$100 million (RM473 million) and US$500 million.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working towards our collective goals while resolving the legal challenges that remain outstanding.”
“We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings,” said Terraform Labs CEO Chris Amani in a statement.
The company and Kwon have been accused of defrauding US$40 billion by crashing stablecoin TerraUSD and sister token Luna in May 2022. A stablecoin is a digital token that usually has a valuation of US$1.
SEC had alleged the company and Kwon raised billions of dollars from investors by offering and selling an interconnected suite of crypto asset securities in unregistered transactions between April 2018 and May 2022.
The May 2022 crash had a domino effect, resulting in the fall of hedge fund Three Arrows Capital, Singapore lender Hodlnaut, brokerage Voyager Digital and lender Celsius Network.
Kwon also faces related US criminal charges over fraud and market manipulation and was subsequently arrested in Montenegro in March last year.
South Korea has requested he be extradited. – January 22, 2024