Fri Sep 20 12:45:21 UTC 2024: ## Terraform Labs to Pay Up to $442 Million in Bankruptcy Settlement
**New York, NY -** Defunct stablecoin firm Terraform Labs, known for the disastrous collapse of its TerraUSD (UST) and Luna (LUNA) tokens in May 2022, has been granted Chapter 11 bankruptcy by a Delaware court. The move, deemed a “welcome alternative” by Judge Brendan Shannon, aims to avoid further complex litigation and settle losses incurred by investors.
The company, which previously agreed to pay a $4.47 billion settlement to the Securities and Exchange Commission (SEC) for defrauding investors, has estimated it will pay between $184.5 million and $442.2 million to investors and other stakeholders during its liquidation. However, the total value of the eligible crypto losses remains “impossible to estimate.”
Terraform Labs founder and former CEO, Do Kwon, who evaded authorities for years, was arrested in Montenegro in December 2023 on false passport charges. He is currently facing extradition to his native South Korea following an August ruling by Montenegro’s Supreme Court.
The SEC’s settlement, however, hinges on Terraform Labs covering all other losses during the liquidation process. If the company fails to do so, the SEC may ultimately receive little from the settlement.
The collapse of TerraUSD and Luna, which wiped out $45 billion in market value overnight, triggered a “crypto winter” that lasted over a year and led to the downfall of several crypto firms, including Three Arrows Capital (3AC).
This bankruptcy decision marks a significant step towards resolving the fallout from the Terraform Labs debacle, though it remains uncertain how much investors will ultimately recover from the liquidation process.
First Piper 