Company behind cryptocurrency Luna declares bankruptcy while CEO awaits trial

Terraform Labs, the company responsible for creating the Terra cryptocurrency (LUNA), declared bankruptcy this Sunday (21) in the US. The founder and main shareholder, Do Kwon, has been in prison since March last year after being caught by Montenegro police with forged documents.

While cryptocurrencies in the LUNA ecosystem have made a brief recovery since their collapse in 2022, the bankruptcy filing has left investors worried.

Three cryptocurrencies are trading lower this morning. Earth (LUNA) It is Terra Classic (LUNC) They lost 7.5% It is 8.5% of its value in the last 24 hours. All the TerraClassicUSD (USTC) trades at a low level 8% in the same period. In November, USTC returned to the top 100 of the market by gaining 300% in just four days, but the increase did not last.

Terraform Labs files for bankruptcy in the US

Many believe that the collapse of Terra (LUNA) was the first piece that caused a huge domino effect on the cryptocurrency market, later bringing down other giants such as FTX and Three Arrows Capital.

Do Kwon, the South Korean creator of LUNA, was even ‘visited’ by an angry investor at his apartment. While searching authorities and investors alike, Kwon disappeared. Months later, he was arrested in Montenegro with forged documents and could be extradited to the US, where he faces prosecution by the SEC.

Last Sunday (21), his company, Terraform Labs, filed for bankruptcy in the US. According to documents, the company is headquartered in Singapore and has between 100 and 199 creditors. In total, Terraform is said to have between $100 million and $500 million in assets and liabilities.

“Funds will be available for distribution to creditors”points to Terraform Labs bankruptcy document, seen by Livecoins.

Bankruptcy document for Terraform Labs, the company responsible for Terra (LUNA).  Source: Reproduction.Bankruptcy document for Terraform Labs, the company responsible for Terra (LUNA).  Source: Reproduction.
Bankruptcy document for Terraform Labs, the company responsible for Terra (LUNA). Source: Reproduction.

Because Do Kwon is imprisoned in Montenegro, the document was signed by Chris Amani, who has been CEO of Terraform Labs since January 2022. According to the LinkedIn page, the company has between 11 and 50 employees.

Cryptocurrencies fall at the start of the week

The devaluations of cryptocurrencies in the LUNA ecosystem may have been accentuated due to the general market decline. After all, Bitcoin and Ethereum fell 2.2 and 3.8% respectively this Monday morning.

While many believe ETFs are to blame, miners may be primarily responsible for this selling pressure. ‘Outsider’ investors, who have benefited from all the speculation in 2023, may also be behind this downward move in the short term.

Source: Live Coins