Terraform to dissolve following $4.47b settlement with SEC

Terraform Labs plans to disband, allowing the Terraform community to monitor the blockchain ecosystem.

Following a $4.47 billion settlement with the SEC, Terraform Labs announced plans to disband, leaving the future of blockchain in the hands of the Terraform community.

“TFL has always intended to disband at some point and that point is now,” CEO Chris Amani said on X. “We will terminate operations completely.”

The company plans to sell its projects in the Terra ecosystem, which includes Pulsar Finance, Station Wallet, and Enterprise DAO, as part of its liquidation plan.

For some, the SEC’s settlement with Terraform faces scrutiny for not providing meaningful relief to victims of fraud.

“Touting a $4.7 billion deal with Kwon and the now-bankrupt Terraform is predictably on-brand,” Coinbase CLO Paul Grewal said. “But the agreement makes the SEC an unsecured creditor in the UK and orders Kwon to turn over only the more than $7 million in assets he actually owns. “No meaningful relief is available to victims of fraud.”

community oversight

Amani also shared: “The community will need to take over ownership of the chain. I believe there are several teams and developers who want to do this, and you will see this information in the forums soon.”

This community oversight of a blockchain is unprecedented, but not outside the realm of possibility. The Terra ecosystem still operates with the use of various decentralized applications and tokens.

$LUNA It has one of the healthiest token holder distributions you’ll find anywhere in crypto

That’s the only thing that really makes it different

I have hopes

— Will Chen (@stablechen) June 13, 2024

There has been a significant decline in the value of Terra blockchain tokens. The value of LUNA’s successor, LUNA 2.0, was reduced by 97%.

SEC settlement

According to court filings dated June 12, Terraform Labs reached a $4.47 billion settlement with the SEC regarding the implosion of TerraLuna (LUNC) and TerraUSD (UST).

The penalty proposed by SEC prosecutors came after a two-week hearing in March, and a preliminary agreement was announced late last month. The jury found both Terraform and its founder Do Kwon legally liable for the company’s collapse in 2022. Amani, who previously served as COO of Terraform, replaced Kwon in July 2023.

The deal must be approved by a judge in New York and could be one of the largest settlements between a cryptocurrency company and a U.S. regulator. Initially, the SEC had sought a $5.3 billion fine from the parties involved.

This penalty is higher than the penalty imposed by the US Department of Justice on crypto exchange Binance. Terraform filed for Chapter 11 bankruptcy in Delaware court in January.