Do Kwon's Terraform Labs, under probe for a US$40 billion ($53.6 billion) cryptocurrency crash, filed for protection against bankruptcy (Chapter 11) in the United States, according to court papers filed on Sunday, Jan. 21.

On Jan. 22, Monday, Terraform Labs, a stablecoin behind TerraUSD, said the company made the application in a bankruptcy court in Delaware. This move may "enable it to continue its operations and support for the Terra community and ecosystem."

The firm, moreover, thinks that the filing would let it execute its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and the US, involving the US Securities and Exchange Commission (SEC).

Terraform Labs said it intends to meet all financial obligations to employees and vendors during the Chapter 11 case without requiring additional financing. According to Strait Times, the firm had listed assets and liabilities from US$100 million to US$500 million.

"The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding," Mr. Chris Amani, chief executive of Terraform Labs said.