Terraform Labs, the company behind the failed TerraUSD and Luna stablecoins, declared bankruptcy on Sunday. The company’s stablecoins collapsed last year, causing a $40 billion loss in the crypto market.
According to Bloomberg, the company has about $100 million to $500 million in assets and liabilities and owes money to 100 to 199 creditors.
The company is based in Singapore, where its co-founder and ex-CEO Do Kwon owns 92 percent of the shares.
Kwon is one of the most influential figures in the crypto industry, having raised over $200 million from investors like Galaxy Digital and Coinbase Ventures. However, he is also in big trouble with the law, and is currently in jail, facing fraud charges in the US and South Korea.
The ex-CEO and his associate, Daniel Shin, were caught in Montenegro last March, using fake passports. They are waiting to be extradited to the US, where they will face charges of securities fraud for allegedly misleading investors and regulators about the stability and liquidity of their stablecoins.
Kwon is also wanted in South Korea for the same reason, as well as for tax evasion and embezzlement. He also tried to shift the blame to hackers and market manipulators, but his claims were dismissed by experts and authorities.
Kwon is not the only one who fell from grace in the crypto world. Other former stars like Sam Bankman-Fried of FTX and Alex Mashinsky of Celsius Network are also facing legal troubles, as they are accused of violating securities laws and consumer protection rules.
The crypto industry is under increasing scrutiny and regulation, as governments and agencies try to crack down on fraud and money laundering. At the beginning of the month, Taiwan’s cryptocurrency scene experienced a shakeup when the Criminal Police Brigade scrutinized ACE, one of its major exchanges, for suspected fraudulent activities. On the other hand, Coinbase is being accused by the SEC of running an illegal securities exchange.