Key Takeaways:
- Terraform Labs has received U.S. court approval to wind down operations following its Chapter 11 bankruptcy filing in January 2024.
- The court sees the wind-down as a better alternative to extended litigation, amid Terraform’s collapse linked to its failed UST stablecoin.
- Terraform and its founder Do Kwon face $4.5 billion in penalties, with Kwon still entangled in legal issues and potential extradition.
Terraform Labs, a major player in the crypto industry that collapsed in 2022, has received approval from a U.S. court to wind down its operations as part of its Chapter 11 bankruptcy plan.
The company filed for bankruptcy in January 2024, with liabilities and assets estimated between $100 million and $500 million.
Terraform Labs got court approval to wind down its operations in bankruptcy after agreeing to settle an SEC lawsuit accusing the company of defrauding crypto investors who lost an estimated $40 billion when the TerraUSD and Luna tokens collapsed in 2022 https://t.co/fDWipRafXX pic.twitter.com/RxJFA2bziv
— Reuters Legal (@ReutersLegal) September 19, 2024
Judge Brendan Shannon described the wind-down plan as a better alternative to prolonged litigation over investor losses, which followed a 2023 SEC lawsuit against Terraform and its founder, Do Kwon.
Terraform’s downfall was linked to the failure of its algorithmic stablecoin, UST, amid other blockchain claims.
In 2024, a court ordered the company and Kwon to pay $4.5 billion in penalties.
Kwon, arrested in Montenegro in 2023 for using fake documents, faces potential extradition to the U.S. or South Korea, with legal troubles continuing to unfold.
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