Terraform Labs, founded in 2018 by Do Kwon and Daniel Shin, developed the Terra blockchain and algorithmic stablecoin TerraUSD (UST).159 In May 2022, UST lost its peg to the US dollar, causing the collapse of UST and LUNA and wiping out over $40 billion in market value.15917 Terraform Labs filed for Chapter 11 bankruptcy in January 2024 and later announced it would dissolve after settling with the SEC for $4.47 billion.1451215
Timeline
| Date | Event | Source |
|---|---|---|
| 2018-01 | Do Kwon and Daniel Shin founded Terraform Labs to create price-stable cryptocurrencies. | 59 |
| 2018-04-23 | Terraform Labs was officially incorporated in Singapore. | 5 |
| 2019-01-30 | Terraform Labs introduced the LUNA token. | 5 |
| 2019 | Terraform Labs launched TerraUSD (UST), an algorithmic stablecoin pegged to the US dollar. | 59 |
| 2020-07-07 | Anchor Protocol, a Terra-based lending platform offering 20% APY, was launched. | 5 |
| 2021-01 | Galaxy Digital co-led a $25 million funding round in Terraform Labs. | 7 |
| 2021-07-16 | Investors committed $150 million to Terra's Ecosystem Fund. | 7811 |
| 2021-12 | Terra became the second-largest blockchain by market capitalization after Ethereum. | 5 |
| 2022-03-16 | Terraform Labs raised $88 million in Series B funding. | 5 |
| 2022-04-20 | Terraform Labs raised $50 million at a valuation of $350 million. | 5 |
| 2022-05-07 | Large withdrawals and sales of UST began, starting the de-pegging process. | 5 |
| 2022-05-09 | TerraUSD's price crashed to 35 cents, far from its $1 peg. | 5 |
| 2022-05-12 | LUNA collapsed from $80 to pennies, and $40 billion in market value was lost. | 5 |
| 2022-09 | South Korean prosecutors filed a warrant for Do Kwon's arrest, and Interpol added him to its Red Notice list. | 59 |
| 2023-02-16 | The SEC charged Terraform Labs and Do Kwon with securities fraud. | 15 |
| 2023-04 | Co-founder Daniel Shin was indicted by South Korean authorities. | 5 |
| 2023-11-13 | Terraform Labs acquired Pulsar Finance, a cross-chain portfolio manager. | 5 |
| 2024-01-21 | Terraform Labs filed for Chapter 11 bankruptcy in Delaware. | 1351415 |
| 2024-04-05 | A New York jury found Terraform Labs and Do Kwon liable for defrauding investors. | 5 |
| 2024-06-13 | A U.S. District Court judge approved a $4.47 billion settlement between Terraform Labs, Do Kwon, and the SEC. | 5 |
| 2024-12-27 | Montenegro ordered the extradition of Do Kwon to the United States. | 5 |
| 2024-12-31 | Do Kwon was handed over to the FBI in Podgorica. | 5 |
| 2025-12-12 | Do Kwon was sentenced to 15 years in prison for fraud and manipulation. | 5 |
Money raised
Terraform Labs raised more than $200 million from investors including Arrington Capital, Coinbase Ventures, Galaxy Digital, and Lightspeed Venture Partners.5910 In January 2021, Galaxy Digital co-led a $25 million funding round in Terraform Labs.7 In July 2021, investors committed $150 million to Terra's Ecosystem Fund.7811 On March 16, 2022, Terraform Labs raised $88 million in Series B funding.5 On April 20, 2022, Terraform Labs raised $50 million at a valuation of $350 million.5 The collapse of UST and LUNA wiped out over $40 billion in market value.15917 Terraform Labs filed for bankruptcy with estimated assets and liabilities between $100 million and $500 million.115 In June 2024, a U.S. District Court judge approved a $4.47 billion settlement between Terraform Labs, Do Kwon, and the SEC.5
Investors named in the sources: Arrington Capital59, Coinbase Ventures579, Galaxy Digital57910, Lightspeed Venture Partners5910, Pantera Capital78, Arrington XRP Capital78, BlockTower Capital8, DeFiance Capital10.
What happened
Terraform Labs was founded in 2018 by Do Kwon and Daniel Shin.159 The company was incorporated in Singapore on April 23, 2018.5 Terraform Labs developed the Terra blockchain, designed to support algorithmic stablecoins pegged to fiat currencies.59 The Terra blockchain used a dual token mechanism involving Terra stablecoins and the LUNA token to maintain price stability.59 Terraform Labs introduced the LUNA token on January 30, 2019.5
Terraform Labs launched TerraUSD (UST), an algorithmic stablecoin pegged to the US dollar, in 2019.59 UST was designed to maintain its peg through a mint-and-burn mechanism with LUNA.59 The Terra ecosystem expanded to include decentralized finance applications, payment integrations, and staking mechanisms.9 Terraform Labs launched the Anchor Protocol on July 7, 2020, offering 20% APY on UST deposits.5 Terraform Labs raised more than $200 million from investors including Arrington Capital, Coinbase Ventures, Galaxy Digital, and Lightspeed Venture Partners.5910
In January 2021, Galaxy Digital co-led a $25 million funding round in Terraform Labs.7 In July 2021, investors committed $150 million to Terra's Ecosystem Fund.7811 By December 2021, Terra became the second-largest blockchain by market capitalization after Ethereum.5 In April 2022, LUNA reached an all-time high of $119.51 with a $41 billion market cap.5 By May 2022, UST had over $18 billion in circulation and was one of the top 10 stablecoins by market cap.5
On March 16, 2022, Terraform Labs raised $88 million in Series B funding.5 On April 20, 2022, Terraform Labs raised $50 million at a valuation of $350 million.5 On May 7, 2022, large withdrawals and sales of UST were observed, beginning the de-pegging process.5 On May 9, 2022, TerraUSD's price crashed to 35 cents, far from its $1 peg.5 The algorithmic stabilization mechanism failed as market participants rushed to exit positions.9
On May 12, 2022, LUNA collapsed from $80 to pennies, and $40 billion in market value was lost.5 The collapse wiped out more than $45 billion in market capitalization within approximately one week.9 The collapse triggered a broader crypto market crash and contributed to the failure of Three Arrows Capital.5 In September 2022, South Korean prosecutors filed a warrant for Do Kwon's arrest, and Interpol added him to its Red Notice list.59 On February 16, 2023, the SEC charged Terraform Labs and Do Kwon with securities fraud.15
In April 2023, co-founder Daniel Shin was indicted by South Korean authorities.5 On November 13, 2023, Terraform Labs acquired Pulsar Finance, a cross-chain portfolio manager.5 On January 21, 2024, Terraform Labs filed for Chapter 11 bankruptcy in Delaware.1351415 The bankruptcy filing listed estimated assets and liabilities between $100 million and $500 million and 100 to 199 creditors.115 On April 5, 2024, a New York jury found Terraform Labs and Do Kwon liable for defrauding investors.5
On June 13, 2024, a U.S. District Court judge approved a $4.47 billion settlement between Terraform Labs, Do Kwon, and the SEC.5 Following the settlement, CEO Chris Amani announced that Terraform Labs would dissolve and wind down operations completely.4 On September 19, 2024, Terraform Labs received court approval for its bankruptcy wind-down.12 On December 27, 2024, Montenegro ordered the extradition of Do Kwon to the United States.5 On December 31, 2024, Do Kwon was handed over to the FBI in Podgorica.5
On December 12, 2025, Do Kwon was sentenced to 15 years in prison for fraud and manipulation.5 As of the post-confirmation report for the quarter ending March 31, 2026, the Wind Down Trust had distributed nothing to plan creditors.15 The plan administrator continued reconciling more than 16,000 crypto loss claims and pressing a $4 billion lawsuit against Jump Trading.15
Legal outcomes
- chargedIn September 2022, South Korean prosecutors filed a warrant for Do Kwon's arrest, and Interpol added him to its Red Notice list.59
- chargedIn April 2023, co-founder Daniel Shin was indicted by South Korean authorities for his role in the Terra ecosystem.5
- convictedOn April 5, 2024, a New York jury found Terraform Labs and Do Kwon liable for defrauding investors.5
- settledOn June 13, 2024, a U.S. District Court judge approved a $4.47 billion settlement between Terraform Labs, Do Kwon, and the SEC.5
- convictedOn December 12, 2025, Do Kwon was sentenced to 15 years in prison for fraud and manipulation.5
Where the founders are now
Do Kwon was extradited to the United States on December 31, 2024.5 Do Kwon was sentenced to 15 years in prison on December 12, 2025.5 Daniel Shin was indicted by South Korean authorities in April 2023.5
Lessons, as others put them
"Terraform and Do Kwon’s fraudulent activities caused devastating losses for investors, in some cases wiping out entire life savings. Their fraud serves as a reminder that, when firms fail to comply with the law, investors get hurt."SEC Chair Gary Gensler5
"The whole system only works if people believe it works. Once that belief falters, it's game over."one crypto analyst5
Sources
- Terraform Labs files for Chapter 11 bankruptcy | TechCrunch, TechCrunch, 2024-01-22
- Tech 5: Alphabet, Meta and Microsoft Close at All-time Highs, Terraform Files for Bankruptcy, Investing News Network (INN), 2024-01-26
- Terraform Labs to Dissolve After SEC Settlement, CEO Announces, Bitcoin News, 2024-06-13
- 🤯 How Terraform Labs defrauded investors and wiped out the entire crypto market in 72 hours, The Runway Ventures, May 25, 20
- Crypto investors like Terraform Labs so much, they're committing $150 million to its 'ecosystem' | TechCrunch, TechCrunch, 2021-07-16
- Terraform Labs bags $150m in funding from major crypto players for DeFi Ecosystem Fund, FinTech Global, 2021-07-19
- Terraform Labs - Development | CryptoSlate, CryptoSlate, Apr 8, 202
- Terraform Labs - Investor Presentations and Pitch Decks, slidebook.io
- Terra Attracts $150M for DeFi Ecosystem Fund, coindesk.com, Jul 16, 20
- Terraform Labs approved for bankruptcy wind-down after ..., reuters.com, Sep 19, 20
- Epiq 11, dm.epiq11.com
- Terraform Labs: $4.47B SEC Settlement Shapes Liquidating Plan, ElevenFlo, 2026-01-17
- SEC v. Terraform Labs Pte. Ltd.: SDNY Judge Rakoff Denies Defendants’ Motion to Dismiss SEC’s Claims, Rejects the Ripple Court’s Interpretation of the Howey Test | Morrison Foerster, Morrison Foerster, Aug 4, 202
How this case file was put together
Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.
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