Terraform Labs files for bankruptcy protection in the U.S.

Terraform Labs, the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets, filed for Chapter 11 bankruptcy in the United States, according to court papers filed on Sunday.

In a filing with the bankruptcy court in Delaware, Singapore-based Terraform Labs listed assets and liabilities from $100 million to $500 million.

Recently, a federal judge postponed the trial of the U.S. Securities and Exchange Commission (SEC) against the company and its co-founder, Do Kwon, over an alleged $40 billion cryptocurrency fraud.

Kwon and Terraform Labs were held responsible for two cryptocurrencies whose collapse caused turbulence in crypto markets around the world in 2022.

The SEC’s civil case against Terraform and Kwon is linked to the collapse of TerraUSD, a “stablecoin” designed to maintain a constant $1 price, and the more traditional token Luna, which closely associated with TerraUSD.

Both cryptocurrencies lost an estimated $40 billion or more when TerraUSD failed to maintain its $1 peg in May 2022.