The Terraform Labs bankruptcy case has established a crucial date for victims of the Terra collapse to file crypto loss claims. The court has mandated that victims submit their claims by August 21, 2024, at 18:00 ET or 22:00 UTC. This significant step brings those affected by the Terra ecosystem collapse closer to relief.
This deadline allows victims to participate in the Chapter 11 bankruptcy proceedings of Terraform Labs. In May 2022, the Terra ecosystem experienced a severe collapse when the supposed stablecoin TerraUSD depegged. Consequently, investors faced a massive $40 billion loss as TerraUSD and Terra tokens plummeted nearly 99%. This crisis spread beyond Terra, triggering a broader crypto market contagion and causing Bitcoin (BTC) to drop to $17,593 within a month.
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Chapter 11 Bankruptcy Proceedings
In January 2024, Terraform Labs filed for Chapter 11 bankruptcy to manage the aftermath of the implosion and restructure amidst financial difficulties. As part of these ongoing proceedings, the court now requires anyone with a crypto loss claim against Terraform Labs to file by the August deadline. This requirement is essential for those who wish to vote on the proposed Chapter 11 plan. Eligible claimants include individuals who suffered losses from Terraform Labs Pte Ltd before Jan. 21, 2024, and those who suffered losses from Terraform Labs Limited before July 1, 2024.
Importance Of The Deadline
Missing the deadline will not prevent future claim submissions but will affect voting rights on the plan. Notably, the filing is only for voting on the plan and not for fund distribution to victims. Details on fund distribution will be addressed later in the plan. Victims can submit their claims online or by mail. Epiq Corporate Restructuring, LLC, the appointed claims agent, will oversee the submission and processing of claims.
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Claimants can find detailed instructions and necessary forms on the Epiq Corporate Restructuring website. This August deadline offers a chance for Terra collapse victims to have their losses acknowledged in the bankruptcy proceedings. Legal experts and financial advisors are urging all eligible claimants to act promptly.
This announcement follows Terraform Labs’ settlement with the U.S. Securities and Exchange Commission (SEC) in June 2024, where the company agreed to pay $4.47 billion. Additionally, the court directed Terraform Labs to undelegate and burn 150 million LUNA tokens and reopen the Terra Classic shuttle bridge.
