Terraform Labs, the company behind the Terra ecosystem, has voluntarily filed for Chapter 11 bankruptcy protection in the U.S.
According to a Jan. 21 filing in the United States Bankruptcy Court for the District of Delaware, the firm estimated that both its assets and liabilities fell within the range of $100 million to $500 million.
The filing also lists the number of estimated creditors as under 200, and shows that the creditor with the largest unsecured claim was U.S. law firm K&L Gates with a claim of $3,474.50.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” said Chris Amani, CEO of Terraform Labs in a statement.
“We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings.”
Both Terraform Labs and its former CEO Do Kwon are in the midst of a legal battle with the U.S. Securities and Exchange Commission (SEC), with the latter alleging that Kwon and the company orchestrated a $40 billion crypto fraud.
Last week, a federal judge pushed back the trial until mid-March so that Kwon could attend it in person after his extradition from Montenegro to the U.S.
A spokesperson for Terraform Labs emphasized that the firm’s filing for bankruptcy protection was a “strategic step” that would allow it to execute its business plan while navigating the ongoing legal proceedings.