On Sept. 19, Terraform Labs, the company behind the Terra blockchain protocol, gained court approval to wind down its operations as part of its bankruptcy proceedings.
During a pivotal hearing on Thursday, U.S. Bankruptcy Judge Brendan Shannon approved the firm’s plan to exit Chapter 11 bankruptcy in Wilmington, Delaware. This decision marks a critical point in Terraform Labs’ ongoing legal challenges and financial troubles.
As reported by Reuters, Terraform Labs also reached a settlement with the U.S. Securities and Exchange Commission. Judge Shannon described the resolution as a “welcome alternative” to prolonged litigation, following the company’s significant financial losses and the impact on investors.
Terraform Labs originally filed for Chapter 11 bankruptcy protection in January. In June, the company settled with the SEC for $4.47 billion, after the federal agency had initially sought $5.3 billion in April.
With the bankruptcy wind-down, Terraform Labs is expected to distribute between $184.5 million and $442.2 million to its creditors and stakeholders.
Terraform Labs’ current CEO, Chris Amani, revealed in June via X that the company had always intended to dissolve, and it is now in the final stages of closing its operations.
The company acknowledged that estimating the total value of cryptocurrency losses to be repaid during the liquidation process is “impossible.” The figures released are only approximations, with the exact amounts remaining unclear. While Terraform Labs will settle with its creditors first, the U.S. SEC will only begin collecting on its settlement once those payments have been made.
The SEC had accused Terraform Labs and its co-founder, Do Kwon, of defrauding investors through a multi-billion dollar cryptocurrency scheme. The collapse of Terraform’s TerraUSD and Luna stablecoins wiped out roughly $60 billion in investor assets.
Following the crash, Kwon evaded authorities for months, moving between various locations in Europe and Asia. He was eventually arrested in Montenegro last spring and has since been held in custody as he awaits possible extradition to the United States or South Korea. Montenegro’s Supreme Court is expected to rule this month on whether there were legal violations in the extradition process.
From: crypto.news
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