Terraform Labs (TFL), the UST and LUNA-affiliated non-profit organization founded by Do Kwon, has filed for Chapter 11 bankruptcy protection under the US Bankruptcy Code.
The news comes after the US District Court for the Southern District of New York ruled in favor of the US Securities and Exchange Commission (SEC) in a lawsuit against TFL and its founder Do Kwon.
According to the judge's ruling, the company offered and sold unregistered securities in the form of UST, LUNA, wLUNA and MIR.
The fraud claim will be tried to a jury.
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In addition to the United States, South Korean authorities have also filed lawsuits against Kwon for violating capital markets laws.
According to the court filing, the company has between $100 million and $500 million in estimated liabilities and the same amount in estimated assets.
Chris Amani, CEO of Terraform Labs, said in a statement:
"The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding."