Terraform Labs to Reimburse Crypto Losses After Terra Collapse

Terraform Labs, the company behind the failed LUNA cryptocurrency and its algorithmic stablecoin TerraUSD (UST), is set to launch a claims portal for individuals who

Terraform Labs, the company behind the LUNA cryptocurrency and its algorithmic stablecoin TerraUSD (UST), is launching a claims portal for individuals who lost funds during the collapse of its ecosystem in 2022. The portal, which will open on March 31, will allow those who suffered losses of at least $100 to register their claims.

The move follows a Delaware court’s approval of Terraform Labs’ plan to wind down its operations. This ruling was seen as a step forward in allowing the company to move past the legal battles over investor losses. Additionally, Terraform Labs settled with the U.S. Securities and Exchange Commission (SEC) in June 2024, paying a $4.47 billion penalty for fraud.

Those wishing to file a claim will need to do so via the designated portal by April 30 at 11:59 PM ET. Claims below $100 will not be considered. Claimants can provide two types of evidence: manual evidence, such as transaction logs and screenshots, or preferred evidence, which includes read-only API keys and is deemed more accurate. Manual evidence may result in extended review times, and it could be rejected if preferred evidence is available, Terraform Labs noted.

The company has estimated that it could pay out between $184.5 million and $442.2 million to eligible claimants, but the final amount is still to be determined. Before its collapse, Terraform Labs managed an ecosystem valued at $45 billion, which included its algorithmic stablecoin and LUNA token.

The downfall of Terraform Labs had a significant impact on the crypto space. It also led to the arrest of Do Kwon, the founder of Terraform Labs, in Montenegro before he was extradited to the U.S. to face multiple criminal charges. His next court hearing is set for April 10, with prosecutors currently examining new evidence in the case.