Terraform Labs collapse — what creditors were owed and recovered (2022)

TerraUSD, Terraform's algorithmic stablecoin, began slipping below its dollar peg on 7 May 2022 and broke decisively on 9 May 2022, collapsing alongside its sister token LUNA over the following days. Roughly 40 to 45 billion dollars of market value was erased in about three days, with wide contagion across crypto lenders and funds. Terraform Labs was an issuer and protocol developer rather than a custodian, so there is no single date on which customers were locked out of withdrawals.

Terraform Labs Pte. Ltd., a Singapore-incorporated company, filed Chapter 11 in the US Bankruptcy Court for the District of Delaware on 21 January 2024, case 24-10070 (BLS). The petition estimated assets and liabilities each between 100 million and 500 million dollars and listed between 100 and 199 creditors. Those figures bear no relation to the 2022 market losses, which are not scheduled liabilities.

In April 2024 a New York jury found Terraform and Do Kwon liable for civil fraud, and Terraform agreed to an SEC judgment of about 4.47 billion dollars. The Delaware court confirmed a second amended plan of liquidation in September 2024 and a Wind Down Trust took over the estate.

A crypto loss claims process drew 16,640 claims, with the bar date extended to 16 May 2025. The corporate entity was liquidated in January 2026 and the wind-down period was extended to 31 December 2026. No distributions had been made to plan creditors as at the quarter ending 31 March 2026.