US Court Approves Terraform Labs Bankruptcy... "At Least 200 Billion Won to Be Paid After Liquidation"

A U.S. court has approved the bankruptcy of Terraform Labs, the issuer of the cryptocurrencies Terra and Luna.

According to Bitcoin.com and others, Delaware bankruptcy court judge Brendan Shannon approved Terraform Labs' bankruptcy plan on the 19th (local time), stating that the plan offers a better resolution than further litigation.

Terraform Labs estimated that as part of the bankruptcy liquidation, it could pay cryptocurrency buyers and other investors between $184.5 million and $442.2 million (approximately 245.5 billion to 588.6 billion KRW).

Earlier, in June, Terraform Labs agreed to pay $4.47 billion (approximately 5.9496 trillion KRW) in disgorgement and fines in a civil lawsuit filed by the U.S. Securities and Exchange Commission (SEC). However, at that time, the SEC agreed that Terraform Labs would first resolve claims for cryptocurrency loss compensation as part of the bankruptcy liquidation before paying fines, so major foreign media reported that little of the bankruptcy liquidation funds would be collected.

In 2021, the SEC filed a civil lawsuit alleging that Kwon and Terraform Labs deceived investors regarding Terra's stability, causing significant losses, and the jury found Kwon and Terraform Labs liable. Accordingly, Kwon and Terraform Labs decided to settle with the SEC before the second phase trial to determine damages.

Kwon was indicted on charges including fraud in South Korea and the U.S. following the Luna-Terra crash in May 2022. After being arrested in March last year at Podgorica International Airport in Montenegro for passport forgery, he remains detained there. The final decision on where Kwon will be extradited has not yet been made.