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Terraform Labs – the bankrupt cryptocurrency firm co-founded by Do Kwon – is set to face a Chapter 11 bankruptcy reorganization hearing on September 19.
The hearing will be crucial in shaping the company’s future as it navigates the aftermath of the Terra ecosystem’s dramatic collapse in 2022, which triggered extensive legal and financial challenges.will essentially decide if Terraform Labs can successfully restructure and potentially recover from bankruptcy or if it will be compelled to liquidate its assets and shut down operations permanently.
Terraform Labs is the company behind the Terra blockchain, which is known for its ill-fated algorithmic stablecoin TerraUSD and LUNA. On May 9, 2022, UST began to lose its peg to the US dollar, causing its price to plummet by 90% within a week, while LUNA, once a top ten cryptocurrency, dropped to near zero from a high of over $100.nearly $45 billion in market value. Terraform Labs halted the Terra blockchain on May 13 as attempts to stabilize the system failed.
The latest development comes exactly eight months after Terraform Labs filed for Chapter 11 bankruptcy in Delaware in January 2024, starting a complicated legal process. Kwon also faced legal action, leading to a $4.5 billionTerraform Labs for $1.3 billion, alleging market manipulation of Luna and UST, which led the now-defunct hedge fund to invest heavily before the tokens’ collapse. This lawsuit aims to recover funds for 3AC’s creditors following the hedge fund’s downfall.
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