Terraform Labs, the company behind the cryptocurrencies Terra and Luna, has received bankruptcy approval in the United States. On Thursday, the bankruptcy court in Delaware announced its decision, with Judge Brendan Shannon stating that this approval offers a “welcome alternative” to ongoing lawsuits to resolve investor losses.
The court’s approval allows Terraform Labs’ assets, estimated to be worth between $184.5 million and $442.2 million, to compensate affected investors. However, Cointelegraph reports that it remains unclear whether most investors will be able to recover their full losses.
Founded by Do Kwon, Terraform Labs caused massive losses for investors during the Terra and Luna crash in 2022. The damage is estimated at around $40 billion. Subsequently, in 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the company and filed for bankruptcy in January of this year. In June, it agreed to pay $4.47 billion in restitution and fines after settling with the SEC.
Do Kwon has been arrested by South Korean and U.S. prosecutors on charges including securities fraud. He was caught in Montenegro for using a forged passport. Initially, the Montenegrin court decided to extradite him to South Korea, but the Supreme Court later suspended the extradition.
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