Terraform Labs (TFL) initiates Chapter 11 bankruptcy, Terra (LUNA) price plummets

By Crypto Gloom On Jan 22, 2024

Chapter 11 Decision: Terraform Labs’ move to file for Chapter 11 bankruptcy protection aims to resolve legal issues while pursuing common goals.
Market Impact: Terraform Labs’ bankruptcy filing resulted in a significant drop in Terra (LUNA) and LUNC prices.

In the midst of an important turn of events, Terraform Labs (TFL)The force behind the TerraUSD (UST) stablecoin has filed for Chapter 11 bankruptcy protection in the United States. In the aftermath, the prices of Terra (LUNA) and LUNC fell significantly by more than 5%, adding complexity to an already confusing cryptocurrency landscape.

Big move: Terraform Labs evacuates under Chapter 11.

Over the weekend, Terraform Labs (TFL), led by CEO Chris Amani, made the pivotal decision to seek Chapter 11 bankruptcy protection in Delaware. Amani emphasized the importance of this move, characterizing it as a necessary step for the company and its stakeholders.

Estimated assets and liabilities range from $100 million to $500 million and creditors range from 100 to 199, according to documents filed Jan. 21 in Delaware Bankruptcy Court. Co-founder Do holds the largest stake, a whopping 92%. Mr. Kwon left his remaining shares in the hands of Korean entrepreneur Daniel Shin.

Legal Matters Evolving: Terraform Labs Faces SEC Indictment

At the same time, co-founder Kwon Do-kwon and Terraform Research Institute become entangled in legal complexities. The U.S. Securities and Exchange Commission (SEC) filed fraud charges against them.

in December, Judge Jed S. Rakoff ruled in favor of the SEC, arguing that Terraform Labs and Do Kwon engaged in the sale of unregistered securities and violated securities laws. But the judge dismissed claims involving unregistered securities-based swap transactions, leaving the SEC’s fraud case to be deliberated by a jury.

Market Turmoil: Terra (LUNA) and LUNC Prices Witness Decline

As news of Terraform Labs’ Chapter 11 filing spread, it resonated in the market. Terra (LUNA) has experienced a notable 6% decline over the past 24 hours and is currently trading at a price hovering around $0.62. Price volatility ranged from $0.621 to $0.666.

At the same time, LUNC also fell 2% over the same period and is currently trading at $0.000105, with a 24-hour high of $0.000104 and a 24-hour low of $0.000112. Volume has decreased slightly by 1% over the past 24 hours.