Terraform Labs to open loss claims portal on March 31

Terraform Labs — the company behind LUNA (LUNA) and algorithmic stablecoin TerraUSD (UST) — will launch its crypto loss claims portal on March 31. The portal is aimed at reimbursing individuals who lost at least $100 due to the collapse of the Terra ecosystem in 2022.

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.

To be eligible for reimbursement, claimants must submit a claim and supporting documentation through the crypto loss claims portal by 11:59 pm ET on April 30. 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. It is considered preferred for being the most accurate and reliable data, especially for users of major exchanges.

In its announcement, Terraform Labs 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 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

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.

Before its dramatic collapse, Terraform Labs presided over a $45 billion ecosystem involving its algorithmic stablecoin and the LUNA token. Do Kwan, 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.

The collapse of the Terra ecosystem sent shockwaves through the crypto community. At that time, Bitcoin (BTC) lost 37% of its value in 30 days, falling $19,000.

Kwon’s US court hearing has been delayed until April 10 as prosecutors are reviewing a swath of new evidence.