The Terra network and its leader, Do Kwon, rose to the highest tier of the crypto world, only to fall apart within a couple of days in May of 2022 and wipe out the life savings of desperate everyday investors.
In February 2023, the U.S. Securities and Exchange Commission (SEC) sued Kwon and his company Terraform Labs for selling unregistered securities and defrauding investors as part of the Terra ecosystem spectacular implosion. Notably, Kwon and Terraform recently settled their SEC civil fraud case after agreeing to cough up $4.5 billion in civil penalties and disgorgement.
The settlement approved by District Court Judge Jed Rakoff of the Southern District of New York on June 13 also requires that Terraform Labs, the firm responsible for the $40 billion implosion of LUNA and UST, cease operations immediately and seek approval of a Chapter 11 liquidation plan in its bankruptcy case.
Terraform Labs To Dissolve
Terraform Labs’s current CEO, Chris Amani, asked the community on Wednesday to take over the reins of the Terra network as the company winds down.
“[Terraform Labs] always intended to dissolve at some point, and that point is now,” Amani said on X (formerly known as Twitter ). “We will be winding down operations completely.”
The SEC scored a major victory against Kwon and Terraform Labs two months ago when a jury found the company and its founder had conducted securities fraud through misrepresentations regarding Terra’s success and UST/LUNA stability.
Before this legal loss, Terraform Labs and its community “were well positioned to accelerate things” for the Terra ecosystem, Amani postulated. However, after suffering a huge court defeat, the CEO indicated that the company “can no longer operate.”
Community To Take Over
Amani disclosed that Terraform Labs will sell several key projects, including the portfolio manager Pulsar Finance, the Cosmos wallet Station, and a protocol for creating DAOs within Cosmos called Enterprise Protocol.
He further noted that Terra and Terra Classic blockchains can continue operating under the community’s control. “The community will need to take over ownership of the chain,” Amani said, proposing a community-led governance model that could change how crypto projects operate post-predicament.
The Terraform chief also highlighted plans for a community proposal that would lead to the burning of all of the company’s remaining vested LUNA tokens.
Amani’s announcement comes almost a year after he was named the firm’s director and CEO. Taking over from Do Kwon in July 2023, he previously served as the firm’s chief operating officer before becoming CEO as his former boss was deeply mired in personal legal woes.
The prices of LUNA and LUNC have dropped by 5.6% and 4.8% over the last 24 hours following Terraform Labs’ decision to dissolve operations. That being said, Amani indicated that a lot more is planned over the coming weeks, and he will communicate with the community once the courts approve it.
