Terraform Labs cleared for wind-down amid bankruptcy by US Court

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.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
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By Phạm Mạnh Cường

Phạm Mạnh Cường là một nhà đầu tư Tiền mã hoá và giảng dạy Blockchain ở Trường Đại học Kinh tế - Luật, Đại học Quốc gia Hồ Chí Minh, Việt Nam. Tác giả đã có bằng Thạc sĩ Khoa học máy tính từ năm 2011 tại Đại học Bách Khoa Hồ Chí Minh. Tính đến nay tác giả đã có kinh nghiệm 7 năm giảng dạy cho sinh viên về công nghệ Blockchain và 8 năm đầu tư trong lĩnh vực Tiền mã hoá từ 2016. Tác giả hiện sở hữu hàng nghìn bài viết tổng hợp, nhận định và chỉnh sửa về Tiền mã hoá và Tiền điện tử chất lượng trên Website và ở nhiều kênh khác.

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