New York, Wednesday, August 28, 2024 – Bankrupt crypto firm Terraform Labs is set for a pivotal Chapter 11 bankruptcy reorganization hearing on September 19.
The court’s decision will determine whether the company can restructure and emerge from bankruptcy or be forced to liquidate its remaining assets and cease operations.
Terraform Labs has been in turmoil since May 2022, when its TerraUSD (UST) stablecoin lost its peg to the U.S. dollar, leading to a catastrophic collapse that wiped out billions in value. This event triggered a loss of investor confidence and intense regulatory scrutiny, including a lawsuit from the U.S. Securities and Exchange Commission (SEC) in February 2023.
The company filed for Chapter 11 bankruptcy in Delaware in January 2024, marking the start of a complex legal process. Terraform’s co-founder and former CEO, Do Kwon, has also faced legal action. In July 2024, Terraform and Kwon reached a joint settlement with the SEC, agreeing to pay $4.5 billion in penalties, disgorgement, and interest, effectively banning them from the crypto industry.
As part of the bankruptcy proceedings, Terraform is seeking to sell key assets, including Pulsar Finance, Station, Enterprise, and Warp, to raise funds to meet its obligations. The outcome of the September hearing will be crucial in determining the company’s future and the fate of these assets.
