Terraform Labs, the developer behind the once-prominent public chain Terra, is currently facing financial fraud lawsuits in both South Korea and the United States. In the midst of these legal disputes, Terraform Labs filed for bankruptcy protection with the United States Bankruptcy Court in Delaware on the 21st, estimating assets and liabilities to be between $100 million and $500 million.
(Previous summary: The U.S. SEC agrees to Do Kwon’s personal appearance request, postponing the fraud case trial until April.)
(Background information: U.S. court rules that LUNA and MIR in the Terra case are “securities”! Do Kwon’s fraud case to be tried in January.)
According to documents submitted last Sunday, Terraform Labs, the developer of the public chain Terra, has filed for bankruptcy protection with the U.S. Bankruptcy Court in Delaware under Chapter 11 of the U.S. Bankruptcy Code. The documents show that Terraform Labs’ estimated assets and liabilities are between $100 million and $500 million, with the number of creditors ranging from 100 to 199.
In May 2022, the Terra ecosystem algorithmic stablecoin UST and its native token LUNA collapsed, causing global investors to lose $40 billion. Terraform Labs and its founder Do Kwon were sued by the SEC last year, accused of orchestrating “securities” fraud involving cryptocurrency, violating U.S. securities and exchange laws regarding registration and anti-fraud provisions, and also facing financial crime charges from the Korean prosecutor.
Court documents show that Do Kwon holds approximately 92% of Terraform Labs’ shares, while Daniel Shin, co-founder of Terraform Labs, holds the remaining shares of this Singaporean company.
After filing for bankruptcy protection, Chris Amani, the current CEO of Terraform Labs, released a statement stating that Do Kwon is facing trial for fraud in the United States. Currently, Do Kwon is detained in Montenegro. With requests for his extradition from both South Korea and the United States, Do Kwon’s defense lawyer sought to postpone the SEC’s lawsuit against Terraform Labs and Do Kwon until mid-March, as Do Kwon wishes to appear in court personally, but he is unsure when he will be extradited from Montenegro to the United States. It is expected that he will arrive in the United States no earlier than February or March this year.
On the 15th, the SEC agreed to Do Kwon’s request to postpone the trial date to no earlier than March 18th and expressed the expectation that the trial would commence on April 15th. The U.S. District Court Judge Jed Rakoff will decide whether to change the trial date.
Further reading: The U.S. SEC agrees to Do Kwon’s personal appearance request, postponing the fraud case trial until April.
In November of last year, the High Court of Montenegro initially approved the extradition request for Do Kwon, leaving the decision to extradite him to the United States or South Korea up to the country’s Minister of Justice. Do Kwon later successfully appealed and overturned the High Court’s ruling. However, after the High Court ruled the extradition request to be legal on December 29th, Do Kwon filed another appeal and is currently awaiting a new ruling from the Court of Appeals.
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Do Kwon anxiously awaits extradition to the United States for a personal appearance! Requests to postpone the fraud case trial until March.
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Do Kwon’s application for extradition to the United States and South Korea revoked by Montenegrin court, to be retried next year.