Terraform Labs launches crypto loss claim portal March 31, deadline April 30.
Terraform Labs announced on March 28 that the Crypto Loss Claims Portal will be open on March 31. Prior to the portal’s opening, creditors are required to submit their claims and supporting documents through it by 11:59 p.m. Eastern Time on April 30.
Holdings of eligible loss We will determine the amount of the submitted claim based on the cryptocurrency. There are certain holdings that are not eligible for claims, such as Luna 2.0 on Terra 2.0, as well as crypto assets that have on-chain liquidity that is less than $100.
As part of the settlement agreement that Terraform Labs has reached with the United States Securities and Exchange Commission, the company is activating the claims portal. The move will kick off the process of seeking payment for creditors who have suffered losses as a result of Terra’s collapse.
Both Alexander Svanevik, who works for Standard Crypto, and Ashley Swaren, who is a commercial lead at TokenTerminal, are considered to be among the top unsecured creditors. Terraform Labs submitted a petition for bankruptcy under Chapter 11 in the United States of America in January 2024, stating that its assets and liabilities ranged from $100 million to $5,000 million.
Following the settlement of $4.47 billion with the Securities and Exchange Commission (SEC) for fraud claims related to the collapse of the TerraUSD (UST) stablecoin, a bankruptcy court in the United States granted approval to the company’s plan to wind down its activities by September 2024.
In 2021, the Securities and Exchange Commission (SEC) asserted that Terraform Labs and Do Kwon had misled investors over the capability of TerraUSD to keep its $1 peg.
To be more specific, once the price of TerraUSD fell below $1 for the first time in May 2021, Kwon and Terraform surreptitiously arranged for a third party to purchase huge amounts of TerraUSD to restore its peg. At the same time, they publicly misrepresented the recovery as a result of the algorithm’s efficacy.
In addition, the agency asserted that Kwon and the company had made a false statement with regard to the incorporation of Terraform’s blockchain technology into Chai, a mobile payment application that is extensively utilized in Korea.
Terra collapse
11 filed for bankruptcy a collapse of TerraIn May of 2022, Terra went bankrupt as a result of their stablecoin UST losing its peg to the United States dollar, which resulted in a wipeout of forty billion dollars.
Because it was an algorithmic stablecoin, UST did not have reserves like cash or assets to back it up. Instead, it utilized a mint-and-burn process with its sister token, LUNA, to facilitate its operations.
When there was a greater demand for UST, LUNA was destroyed to mint fresh UST. On the other hand, when there was a need to reduce the supply of UST, UST was destroyed to mint LUNA.
At the beginning of May 2022, significant withdrawals from Anchor Protocol caused sell pressure on UST; this platform offered a deposit rate of twenty percent annual percentage yield (APY) on UST. As UST began to decline from $1, it first dropped to $0.98 and then continued to fall.
The terrified traders hurried to sell the UST, which caused the market to become even more unstable. To reestablish the peg of UST, Terraform Labs coined a significant quantity of LUNA to absorb the demand for it.
But because of this, there was an abundance of LUNA on the market, which caused its price to drop from more than eighty dollars to a fraction of a cent. The attempt to reestablish UST’s peg was unsuccessful, even after Terraform Labs had deployed three billion dollars’ worth of Bitcoin reserves.
Co-founder Do Kwon was taken into custody in Montenegro in March of 2023, and he was extradited to the United States of America in late 2024, where he is currently being charged with fraud and money laundering.
