The tokens of Terraform Labs plummeted in May, forfeiting $40 billion of their value and adding to the 2022 “cryptocrash” narrative.
Co-founder Do Kwon was found guilty of forging documents, and he is currently incarcerated in Montenegro.
US regulators have accused him of defrauding investors, and he is currently awaiting extradition.
He might be extradited to South Korea because he is also accused of fraud there.
The Luna token from Cryptocrash Terraform Labs gained notoriety in December 2021 after its value started to increase from $5 to a peak of $116 in April 2022.
Luna devotees became referred to as “Lunatics,” and Mr. Kwon was called their “king.”
Then all of a sudden, on May 9, 2022, it crashed, losing 99% of its value in a matter of days.
It was designed to remain at a value of $1 because it was algorithmically linked to its stablecoin sister, TerraUSD.
However, the value of TerraUSD crashed to around $0.02, which precipitated a sharp decline in the value of Luna.
In response to the crash, investors withdrew billions of dollars from other cryptocurrencies out of fear of a repeat of the same kind.
It’s estimated that the value of Bitcoin and other cryptocurrencies was destroyed to the tune of $400 billion.
CEO of Terraform Labs Chris Amani made the following statement upon announcing the company’s bankruptcy filing: “This action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding.”
The company released a statement stating that Terraform “intends to meet all financial obligations to employees and vendors during the Chapter 11 case and does not require additional financing to do so.”
