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Terraform Labs, the parent company of the defunct stablecoin TerraUSD, has submitted a petition for Chapter 11 bankruptcy protection in the United States.
What Happened: Do Kwon co-founded Terraform Labs lodged an official request for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware, reported Cointelegraph on Monday.
The filing comes amidst a wave of substantial legal difficulties the firm is currently battling. Terraform Labs’ CEO, Chris Amani, pronounced the move as a necessary measure for the company to maintain operations while addressing the pending legal matters.
Amani took the opportunity to underscore the tenacity of the Terra community and its ecosystem in the face of difficulty. He asserted that the bankruptcy protection would safeguard their capacity to carry on collaborating with the community on infrastructure, inventive tools, and products, and additional ecosystem support.
Reports reveal that the now insolvent firm has a range of $100 to $500 million in both projected assets and obligations.
Why It Matters: Earlier in December, the Appellate Court at Podgorica in Montenegro overturned a previous ruling by the High Court regarding Terra Labs co-founder Do Kwon’s potential extradition, citing issues in the legal process and a lack of clear reasoning.
Price Action: At the time of writing Terra Classic (CRYPTO: LUNC) and Terra (CRYPTO: LUNA) were both down 5%, trading at $0.0001052 and $0.62 respectively, according to data from Benzinga Pro.
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Photo Courtesy: July Ko On Shutterstock.com
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
