New York, Thursday, September 19, 2024- Terraform Labs, the blockchain firm behind the Terra stablecoin, has received approval from a U.S. bankruptcy judge to wind down its operations.
The decision, reported by Reuters News Agency, comes after months of legal battles following the collapse of Terra USD (UST), the company’s algorithmic stablecoin, which caused significant financial damage in the crypto market.
Terraform Labs is expected to pay between $184.5 million and $442.2 million to creditors as part of the bankruptcy process.
This wind-down also follows the conclusion of Terraform’s legal dispute with the U.S. Securities and Exchange Commission (SEC).
Earlier this year, the SEC filed charges against the company and its co-founder Do Kwon, accusing them of defrauding and misleading investors regarding the stability of UST.
In June 2024, Terraform Labs reached a $4.7 billion settlement with the SEC.
The firm agreed to pay $3.58 billion in disgorgement and a $420 million civil penalty. Additionally, Do Kwon was barred from serving as an officer or director in any public company.
Under the bankruptcy plan, the SEC will only receive its monetary claim after harmed investors and other unsecured creditors are fully compensated. If Terraform’s assets are distributed according to the Chapter 11 liquidation plan, the SEC’s claim will be deemed satisfied.
