Case background
The Terraform Labs bankruptcy, explained
Terraform Labs, the company behind UST and LUNA, filed for Chapter 11 bankruptcy in Delaware in January 2024, less than two years after both tokens collapsed. Its plan of liquidation was confirmed in September 2024, and since October 2024 a Wind Down Trust, run by a Plan Administrator, has been turning the estate into money, reviewing claims and suing third parties on behalf of creditors.
If you lost money in UST or LUNA and filed a Crypto Loss Claim, this is the case your claim belongs to. This page walks through what happened in order, explains who is paid first, and ends with what it means for your own claim.
Facts checked
How Terra collapsed and ended up in court
In May 2022, UST lost its peg to the dollar. About $45 billion of market value was wiped out in one week, LUNA went to zero, and the damage spread to other crypto firms, including Three Arrows Capital (3AC), Celsius and Voyager.
Investigations followed. The U.S. Securities and Exchange Commission (SEC) charged Terraform Labs and Do Kwon in February 2023, and on January 21, 2024 Terraform Labs filed for Chapter 11 in the District of Delaware.
Timeline of the case
The case timeline lists every milestone with its source.
| Date | What happened |
|---|---|
| May 2022 | UST loses its peg; about $45B is wiped out in a week; LUNA goes to zero |
| Feb 2023 | The SEC charges Terraform Labs and Do Kwon with securities fraud |
| Mar 2023 | Do Kwon is arrested in Montenegro |
| Jan 21, 2024 | Terraform Labs files for Chapter 11 in Delaware |
| Jun 2024 | $4.47B SEC judgment; the SEC agrees to wait behind Classes 4 and 5 |
| Sep 20, 2024 | Judge Brendan Shannon confirms the Second Amended Plan of Liquidation (Dkt. 717) |
| Oct 1, 2024 | Every Terraform asset moves into the Wind Down Trust |
| Mar 2025 | The Crypto Loss Claims portal opens at claims.terra.money |
| May 2025 | The filing deadline passes with 15,980 claims submitted |
| Aug 2025 | The first 1,299 Initial Determinations go out; Do Kwon pleads guilty in the US |
| Oct 2025 | 3AC's $1.3B claim is classified as a Crypto Loss Claim |
| Dec 2025 | Do Kwon is sentenced to 15 years; the Plan Administrator sues Jump Trading |
| Feb 2026 | The Plan Administrator sues Jane Street |
| Aug 2026 | Jump Trading moves to dismiss for the second time; the ruling is pending |
The SEC judgment, and why the SEC waits behind you
In June 2024 the SEC won a $4.47 billion judgment, then agreed to be paid only after the investors in Classes 4 and 5 are paid in full. Its claim sits in Class 6, behind every Crypto Loss Claim.
Separately, Do Kwon's $204.3 million settlement with the SEC, paid in kind, is the SEC Settlement Fund, which only Class 5 receives. At recent prices it is worth about $83.5 million to $85 million.
The plan, the trust and the claims process
The trust, run by Plan Administrator Todd R. Snyder, sells assets, reviews claims, brings lawsuits and makes any distributions; our guide to the Wind Down Trust covers what it does and what it spends.
Crypto Loss Claims are filed through Kroll on the portal at claims.terra.money. Since August 2025, Initial Determinations have gone out in rolling 30-day cycles. There are 30 days to dispute and 60 days to submit evidence, both from receiving the Initial Determination. Then a Final Determination: 30 days to dispute it in the portal, and 90 days from receiving it to object in court. The first Final Determinations have been issued, and some claimants have objected to theirs in court (Dkt. 1392).
Who gets paid, and in what order
The plan sets a strict payment order, often called the waterfall. Each level is paid before the next one receives anything:
- Costs and reserves of running the trust.
- Classes 1 to 3, secured and priority claims, paid in full.
- Class 4, general unsecured creditors, paid pro rata up to 100%.
- Class 5, Crypto Loss Claims, paid pro rata. This is where UST and LUNA holders sit.
- Class 6, the SEC's $4.47B claim, paid only after Classes 4 and 5 are paid in full.
- Classes 7 to 10, which receive nothing.
Class 5 has two sources of money: what is left of the GUC Pool after Class 4 is paid in full, and the SEC Settlement Fund. Whatever the lawsuits recover adds to what the trust can distribute. The live figures are on the waterfall page.
What is still open
Several things that affect Class 5 are not settled. 3AC's $1.3 billion claim now sits in the same pool as individual holders and dilutes everyone pro rata (the 3AC claim explained), and the total of allowed Crypto Loss Claims is not published.
The lawsuits against Jump Trading and Jane Street were both open as of November 2026 (the lawsuits explained). Meanwhile the trust spent $65.2 million from October 2024 to September 2026, and no payments to Class 4 or Class 5 have been reported.
What this means for your claim
Any payment on your claim comes from the trust, pro rata and in US dollars, after you pass the KYC check every claimant must complete. Nobody can tell you when or how much: no date has been announced, and the inputs above are still moving.
That leaves two paths: hold the claim and wait, or, once it is Allowed, sell it to an institutional buyer. In a standard sale you receive one payment now and the buyer carries the wait and the risk. Sell now or wait puts the two side by side.