Terraform Labs Opens Crypto Loss Claims Portal for 2022 Collapse Victims

Terraform Labs, the company behind the failed TerraUSD (UST) stablecoin and LUNA token, has announced that it will open its Crypto Loss Claims Portal on March 31, 2025. This portal is designed to allow individuals who suffered losses due to the collapse of the Terra ecosystem to file claims for compensation. The portal will remain open until April 30, 2025, and claimants are advised to submit their claims within this window to be considered for reimbursement.

To be eligible for reimbursement, claimants must submit a claim and supporting documentation through the portal. Claims under $100 will not be accepted. There are two types of evidence that claimants can submit: manual and preferred. Manual evidence includes transaction logs, account statements, and screenshots. Preferred evidence refers to read-only API keys, which are considered the most accurate and reliable data, especially for users of major exchanges. Terraform Labs has warned that claims submitted with manual evidence “will likely be subject to a protracted review process” and may be disallowed if preferred evidence is also available.

The move follows a Delaware court’s approval for Terraform Labs to wind down operations. The judge overseeing the case agreed with Terraform Labs’ bankruptcy plan, calling it a “welcome alternative” to further litigation over investor losses. Terraform Labs settled with the US Securities and Exchange Commission (SEC) in June 2024 for $4.47 billion. The company estimates it could pay from $184.5 million to $442.2 million to investors and stakeholders, though it noted that the total amount of eligible crypto losses remains difficult to determine.

Terraform Labs’ fall from grace began in 2022 when the Terra ecosystem collapsed, sending shockwaves through the crypto community. Before its dramatic collapse, Terraform Labs presided over a $45 billion ecosystem involving its algorithmic stablecoin and the LUNA token. Do Kwon, the founder of Terraform Labs, was later arrested in Montenegro and extradited to the United States, where the US Justice Department has charged him with eight felonies. Kwon’s US court hearing has been delayed until April 10 as prosecutors are reviewing a swath of new evidence.

In June 2024, Terraform Labs announced that it would cease operations and transfer control of the Terra blockchain to its community. The entity planned to sell key projects in the Terra ecosystem and burn unvested and vested holdings. The opening of the Crypto Loss Claims Portal is a crucial step in the bankruptcy process, providing a structured mechanism for creditors to seek compensation for their losses. It also highlights the ongoing efforts by Terraform Labs to resolve the financial issues stemming from the collapse of the Terra ecosystem. The portal's launch is expected to bring some closure to the affected creditors and contribute to the overall resolution of the bankruptcy case.