Terraform Labs Opens Claims Portal for TerraUSD De-pegging Losses
1min read Terraform Labs has initiated an online portal for investors to submit claims for financial losses incurred due to the de-pegging of TerraUSD in May 2022. The portal, managed by administrators at Kroll, will be operational from March 31 to April 30, providing a one-month window for affected investors to file their claims.
To support their claims, applicants must provide evidence such as wallet addresses where Terra-based cryptocurrencies were held and transaction logs for any tokens sold at a loss following the de-peg. Kroll will then determine an "Initial Determination" for each applicant, specifying a "Crypto Loss Amount." Compensation will be distributed on a pro rata basis, depending on the total amount available for compensation and the number of claimants.
Ask Aime: What should I do if I invested in TerraUSD and lost money when it de-pegged in May 2022?
The administrators have acknowledged that the pro rata share of approved distributions may be significantly less than the actual Crypto Loss Amount. In September, Terraform Labs estimated that it could disburse between $184.5 million and $442.2 million to creditors, although the total value of eligible losses remains uncertain. Given that TerraUSD and Luna were valued at over $45 billion before their collapse, many creditors may receive less than their total losses.
Kroll will notify creditors within 90 days of the application deadline, allowing claimants to dispute the administrator’s determination of their loss amounts. Reimbursements are expected to be paid in U.S. dollars, as distributions in other currencies may be impossible.
Terraform Labs filed for Chapter 11 bankruptcy protection in January 2023, reporting assets and liabilities between $100 million and $500 million. In July 2024, the company agreed to pay a $4.5 billion fine to settle fraud charges with the SEC. Founder Do Kwon’s fraud trial is scheduled to begin on January 26, 2026, in the U.S. District Court for the Southern District of New York, and is expected to last between one and two months.
This process underscores the cryptocurrency industry's gradual alignment with traditional financial services regulations. Hedi Navazan, the chief compliance officer at 1inch Labs, noted that while this may restore trust in the community, it is a standard process in financial markets. The claim portal and compensation plan emerged from the settlement Terraform Labs reached with the SEC in September, highlighting the importance of regulatory protections for consumers.
