Terraform Labs plans to dissolve, leaving the Terraform community to monitor the blockchain ecosystem.
In the wake of a $4.47 billion settlement with the SEC, Terraform Labs has announced plans to dissolve, leaving the blockchain’s future in the hands of the Terraform community.
“TFL always intended to dissolve at some point, and that point is now,” CEO Chris Amani posted on X. “We will be winding down operations completely.”
As part of its dissolution plan, the company plans to sell its projects within the Terra ecosystem, which includes Pulsar Finance, Station Wallet, and Enterprise DAO.
For some, the SEC’s settlement with Terraform is facing scrutiny as it leaves fraud victims with zero meaningful relief.
“It’s predictably on-brand to tout a settlement with Kwon and the now-bankrupt Terraform totaling $4.7 billion,” posted Paul Grewal, CLO at Coinbase. “But the settlement just makes the SEC an unsecured creditor in the BK and only orders Kwon to hand over $7 million of assets he actually has. There’s zero meaningful relief to fraud victims.”
Community oversight
Amani also posted: “the community will need to take over ownership of the chain. I believe there are a couple of teams and devs who want to do this, and you should be seeing information in the forums soon.”
This community oversight of a blockchain is unprecedented but is not out of the realm of possibility. The Terra ecosystem is still operating through the use of various decentralized applications and tokens.
— Will Chen (@stablechen) June 13, 2024$LUNA has one of the most wholesome tokenholder distributions you'll find anywhere in crypto
that's the one thing that truly sets it apart
I have hopes
Terra blockchain tokens have experienced a significant decrease in value. LUNA 2.0, the successor to LUNA, has decreased in value by 97%.
According to court filings from June 12, Terraform Labs reached a $4.47 billion settlement with the SEC related to the implosion of TerraLuna (LUNC) and TerraUSD (UST).
The SEC prosecutors’ proposed penalty came after a two-week trial in March and a preliminary deal revealed at the end of last month. A jury found both Terraform and its founder, Do Kwon, legally accountable for the company’s 2022 crash. Amani, who previously served as Terraform’s COO, assumed the position in July 2023, succeeding Kwon.
The agreement needs to be approved by a judge in New York and could become one of the largest settlements between a cryptocurrency company and a U.S. regulatory body. Originally, the SEC had requested $5.3 billion in fines from the involved parties.
This fine is higher than the fine the U.S. Justice Department levied on crypto exchange Binance. Terraform filed for Chapter 11 bankruptcy in a Delaware court in January.