The Terraform Labs bankruptcy case has set up a date for victims of the Terra collapse to file crypto loss claims.
A court has established a key deadline for filing initial crypto loss claims, marking a significant step closer to relief for those affected by the Terra ecosystem collapse. Notably, victims must submit their claims by August 21, 2024, at 18:00 ET or 22:00 UTC, per a recent disclosure.
A Step Toward Relief for Terra Victims
This deadline enables victims to take part in the Chapter 11 bankruptcy proceedings of Terraform Labs. Recall that in May 2022, the Terra ecosystem experienced a severe collapse. The downfall began with the depegging of the purported stablecoin TerraUSD.
This led to an enormous $40 billion loss for investors, with TerraUSD and Terra tokens dropping almost 99%. The crisis spread beyond Terra, triggering a contagion across the broader crypto market. In response, Bitcoin (BTC) plummeted to $17,593 just a month later.
Terraform Labs, the development firm behind the Terra ecosystem, filed for Chapter 11 bankruptcy in January 2024. This step was an effort to handle the aftermath of the implosion and restructure amid financial difficulties.
As part of the ongoing bankruptcy proceedings, the court has now mandated that anyone with a crypto loss claim against Terraform Labs must file by the August deadline. This is crucial for those who want to participate in voting on the proposed Chapter 11 plan. Eligible claimants are individuals who suffered losses from Terraform Labs Pte Ltd before Jan. 21, 2024, and the ones who suffered losses from Terraform Labs Limited before July 1, 2024.
However, it is important to note that missing the deadline will not prevent future claim submissions but will impact voting rights on the plan. Also, the filing is solely for voting on the plan, not for fund distribution to victims. Details on fund distribution will be addressed later in the plan.
Important Notice for the Terra Community regarding the Crypto Loss Bar Date:
The Preliminary Crypto Loss Bar Date for filing Crypto Loss Claims – for chapter 11 voting purposes only – in the Chapter 11 bankruptcy cases of Terraform Labs Pte Ltd (TFL) and Terraform Labs Limited…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) July 22, 2024
Notably, victims can submit their claims online or by mail. Epiq Corporate Restructuring, LLC is handling the process as the appointed claims agent. They will oversee the submission and processing of claims. For detailed instructions and necessary forms, claimants can visit the Epiq Corporate Restructuring website.
Terraform Labs’ Case with the SEC
The August deadline is crucial for victims of the Terra collapse. It offers a chance to have their losses acknowledged in the bankruptcy proceedings. Legal experts and financial advisors are advising all eligible claimants to act promptly.
The recent announcement comes a month after Terraform Labs reached a settlement with the U.S. Securities and Exchange Commission (SEC) in June 2024. Under the settlement, Terraform Labs agreed to pay $4.47 billion.
Moreover, subsequent reports from The Crypto Basic confirmed that the court directed Terraform Labs to undelegate and burn 150 million LUNA tokens. In addition, the court also ordered the reopening of the Terra Classic shuttle bridge.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
