Terraform Labs Pte. Ltd., a blockchain software development company based in Singapore, has filed for bankruptcy after the US Securities and Exchange Commission (SEC) accused the company and its founder, Kwon Do Heyong, of orchestrating a multi-billion dollar crypto asset securities fraud. The fraud allegedly involved an algorithmic stablecoin and other crypto asset securities. Founder Kwon has been sentenced to prison for using forged passports and is being held in Montenegro pending extradition to Korea or the United States.
The company has no funded debt and intends to self-fund the case while pursuing an appeal challenging the SEC's regulatory authority. Currently, Terraform Labs has assets and liabilities ranging from $100 million to $500 million. The company is developing more than 12 applications on the Terra blockchain. However, it may face potential litigation liability and owes potential indemnification obligations to current and former directors, officers, and employees, including for legal fees.
This development is significant for the blockchain industry and investors as it highlights the importance of regulatory compliance in the rapidly evolving cryptocurrency space.
In addition, this case could be the next crypto-bankruptcy in which regulatory authorities take a position on crypto assets. We'll have to see.
Singapore-based Terraform Labs, in a filing with the bankruptcy court in Delaware, listed assets and liabilities in the range of $100-$500 million.
www.reuters.com/...
