Do Kwon’s Terraform Labs files for Chapter 11 bankruptcy protection

Do Kwon’s Terraform Labs, the company behind the now-defunct TerraUSD (UST) stablecoin, has filed for bankruptcy protection in the United States.

The firm filed for Chapter 11 bankruptcy protection at the United States Bankruptcy Court for the District of Delaware, citing between $100 and $500 million in estimated liabilities and assets, according to a Jan. 21 filing.

Kwon’s Terra ecosystem collapsed in May 2022.

Shortly after the firm imploded, the whereabouts of its co-founder remained unknown until he was arrested in Montenegro in March 2023 after attempting to use falsified travel documents to leave the country.

The SEC first filed civil charges against Terraform Labs and Kwon in February 2023.

Both parties were alleged to have orchestrated a “multi-billion dollar crypto asset securities fraud” related to the tokens formerly known as UST and Terra (LUNA).

Both the U.S. and South Korea are seeking Kwon’s extradition.

There has been growing speculation that Kwon could be subjected to multiple sentences in both countries.

If Kwon is extradited to South Korea, he could face a 40-year jail sentence in the country where he is alleged to have committed the majority of his crimes.