Terraform Labs (TFL), the blockchain company at the center of a protracted legal battle with the US Securities and Exchange Commission (SEC), has decided to dissolve its operations following a landmark settlement agreement. The settlement, amounting to a staggering $4.47 billion, ended over a year of intense legal proceedings.
CEO Chris Armani Confirms Terraform Labs’ Closure
On Wednesday, the US SEC disclosed the settlement details, prompting CEO Chris Armani to announce the complete dissolution of the company’s operations via a social media post on X (formerly Twitter).
Armani acknowledged that TFL had “always intended to dissolve at some point” and that the time had come. Expressing gratitude to the supporters who stood by the company throughout the ordeal, Armani also commended the TFL team for their dedication to maintaining the company and ecosystem during the challenging times.
While expressing disappointment over the trial outcome, Armani acknowledged that TFL would wind down operations and transfer ownership of the chain to the community. Armani concluded by saying:
We have a lot more to plan over the coming weeks, and I’ll be able to communicate more once this has been approved by the courts. I’ll be here for the full wind down to ensure all goes smoothly.
Collapse Of TerraUSD And Investor Losses
The legal case against Terraform Labs primarily revolved around allegations of fraud by the SEC. The charges stemmed from the collapse of TerraUSD, a stablecoin, which resulted in approximately $40 billion in investor asset losses in 2022.
During the trials leading up to the settlement, the SEC alleged that investors were deceived about the stability of TerraUSD, which was “purportedly” algorithmically pegged to the US dollar.
Terraform Labs denied these allegations, criticizing the SEC’s portrayal of cryptocurrency companies as “lawless.” Despite having filed for Chapter 11 bankruptcy protection in January, Terraform Labs was ordered by the court to pay the penalties sought by federal regulators.
On the other hand, former CEO Do Kwon, sought by the United States and South Korea for his involvement in capital markets and securities fraud, also faced legal complications.
In April, the Supreme Court of Montenegro overturned Do Kwon’s extradition to South Korea and referred the case back to the Higher Court in Podgorica.
The decision on Do Kwon’s extradition now rests with the Higher Court, which will determine whether the legal conditions for extradition have been met. The final decision on extradition will lie with the justice minister.
As Terraform Labs moves forward with its dissolution, stakeholders and industry observers eagerly await further details regarding the company’s winding-down process. Additionally, the outcome of Do Kwon’s extradition case is yet to be determined, leaving uncertainty surrounding his future and the potential legal ramifications.
When writing, the company’s Luna Classic token (LUNC) was trading at $0.0001013, down 4.3% in the last 24 hours.
Featured image from DALL-E, chart from TradingView.com