- Chapter 11 Decision: Terraform Labs’ move to file for Chapter 11 bankruptcy protection aims to navigate legal challenges while striving to pursue collective goals.
- Market Impact: Terra (LUNA) and LUNC prices see a significant downturn as the fallout from Terraform Labs’ bankruptcy filing unfolds.
In a significant turn of events, Terraform Labs (TFL), the force behind the TerraUSD (UST) stablecoin, has filed for Chapter 11 bankruptcy protection in the United States. The aftermath witnessed a substantial dip in the prices of Terra (LUNA) and LUNC by over 5%, adding a layer of complexity to the already tumultuous cryptocurrency landscape.
A Critical Move: Terraform Labs Takes Shelter Under Chapter 11
Over the weekend, Terraform Labs (TFL), led by CEO Chris Amani, made a pivotal decision by seeking Chapter 11 bankruptcy protection in Delaware. Amani emphasized the move’s significance, framing it as a necessary step for the company and its stakeholders.
The filing in Delaware bankruptcy court, dated January 21, revealed estimated assets and liabilities in the range of $100 million to $500 million, with creditors numbering between 100 and 199. The majority stake, a whopping 92%, is held by co-founder Do Kwon, leaving the remaining shares in the hands of South Korean entrepreneur Daniel Shin.
Legal Challenges Unfold: Terraform Labs Faces SEC Indictment
Simultaneously, co-founder Do Kwon and Terraform Labs find themselves entangled in legal complexities. The U.S. Securities and Exchange Commission (SEC) has brought forth fraud charges against them.
In December, a ruling by Judge Jed S. Rakoff favoured the SEC, asserting that Terraform Labs and Do Kwon engaged in the sale of unregistered securities, a violation of securities laws. However, the judge dismissed claims related to transactions in unregistered security-based swaps, leaving the SEC’s fraud case to be deliberated by a jury.
Market Turmoil: Terra (LUNA) and LUNC Prices Witness a Downfall
As news of Terraform Labs’ Chapter 11 filing spread, the repercussions reverberated in the market. Terra (LUNA) experienced a notable 6% decline within the last 24 hours, with the current trading price hovering at $0.62. The price volatility saw a range between $0.621 and $0.666.
In tandem, LUNC also faced a 2% drop within the same period, currently trading at $0.000105, with a 24-hour high of $0.000104 and a low of $0.000112. The trading volume exhibited a marginal 1% decrease in the past 24 hours.
Discussion about this post