Terraform Labs
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Terraform Labs was the Singapore-based blockchain company founded in 2018 by Do Kwon (with Daniel Shin) behind the Terra ecosystem: the Terra blockchain, the algorithmic stablecoin TerraUSD (UST) and its sister token Luna. UST, once the third-largest stablecoin by market cap, promised a stable $1 peg through an algorithmic mechanism rather than dollar reserves.
02 / Terraform Labs FAILURE REASONS
Failure reasons
The algorithmic peg failed: UST lost its $1 peg in May 2022 and Luna's price collapsed to zero, wiping out at least $40 billion in value and triggering a $2 trillion crypto market plunge. The SEC charged Terraform and Kwon with orchestrating a $40 billion fraud, Kwon was arrested in Montenegro in 2023, and the company agreed to a $4.47 billion SEC settlement in 2024.
03 / EVENT HISTORY
Events in the structured record
- Founded
Do Kwon and Daniel Shin found Terraform Labs; the Terra blockchain, UST and Luna launch.
- UST depeg and collapse
UST loses its dollar peg in May 2022; Luna collapses to zero, wiping out at least $40 billion and setting off a $2 trillion crypto market plunge.
- SEC charges; Kwon arrested
The SEC charges Terraform and Kwon with fraud; Kwon is arrested in Montenegro traveling on a fake passport.
- Bankruptcy and wind-down
Terraform Labs files Chapter 11 in Delaware on January 21, settles with the SEC for $4.47 billion in June, and receives court approval to wind down operations on September 19.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
Terraform Labs filed for Chapter 11 bankruptcy in Delaware on January 21, 2024, listing $100-500 million in assets and liabilities.
- 02
A U.S. court approved the wind-down plan on September 19, 2024.
- 03
Terraform and Do Kwon were ordered to pay $4.47 billion in SEC penalties.