Nearly three years after the Terra ecosystem’s catastrophic $45 billion collapse in May 2022, Terraform Labs is set to open its crypto loss claims portal on March 31. The portal aims to reimburse individuals who lost at least $100 due to the downfall of TerraUSD (UST) and its associated token, LUNA.
This development follows a Delaware court’s approval of Terraform Labs’ plan to wind down operations. The judge overseeing the case described the bankruptcy plan as a “welcome alternative” to prolonged litigation over investor losses.
In June 2024, Terraform Labs reached a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC).
Claim Submission and Eligibility
To qualify for reimbursement, claimants must submit their claims and supporting documentation through the portal by 11:59 PM ET on April 30. Claims under $100 will not be considered.
Claimants can provide two types of evidence:
- Manual evidence: Transaction logs, account statements, and screenshots.
- Preferred evidence: Read-only API keys, which offer the most accurate and reliable verification, particularly for users of major exchanges.
Terraform Labs cautioned that claims relying on manual evidence may undergo an extended review process and could be rejected if preferred evidence is available. The company estimates potential payouts ranging from $184.5 million to $442.2 million, though the exact amount of eligible losses remains uncertain.
Terraform Labs’ Downfall and Legal Battles
In June 2024, Terraform Labs announced it would shut down operations and transfer control of the Terra blockchain to its community. The company planned to liquidate key ecosystem projects and burn unvested and vested holdings.
Before its collapse, Terraform Labs managed a $45 billion ecosystem built around its algorithmic stablecoin, UST, and its native token, LUNA. The company’s founder, Do Kwon, was later arrested in Montenegro and extradited to the U.S., where he faces eight felony charges from the Department of Justice.
The collapse of Terra triggered massive turmoil in the crypto market, contributing to Bitcoin’s 37% drop in value over 30 days, bringing its price down to $19,000.
Kwon’s U.S. court hearing, originally scheduled for earlier this year, has been delayed until April 10 as prosecutors review new evidence.
