TL;DR
- Terraform Labs decides to cease operations following a multi-million dollar agreement with the SEC, involving a $4.47 billion payment and restrictions for the company and its co-founder, Do Kwon.
- CEO Chris Amani formalizes the dissolution of the company, already conceived but accelerated by the agreement with the SEC and charges related to the collapse of the UST stablecoin in 2022.
- Terra’s native tokens, LUNA and LUNC, register declines of 6.87% and 5.2%, respectively, in the last 24 hours following the announcement of the cessation of operations.
Terraform Labs, the company behind the Terra blockchain protocol, has decided to cease its operations after reaching a multi-million dollar agreement with the United States Securities and Exchange Commission (SEC). The agreement involves a $4.47 billion payment and imposes a series of restrictions on both the company and its co-founder, Do Kwon.
Chris Amani, CEO of Terraform Labs, officially announced the dissolution of the company after facing charges related to the collapse of the UST stablecoin in 2022. According to Amani, the company had previously intended to dissolve at some point, and the agreement with the SEC has now accelerated this process. As part of the closure, the company plans to sell key projects within the Terra ecosystem and transfer full control of its blockchain to the community.
1/ With the proposed settlement now public, i can finally share some details about what is next for TFL.
— Chris Amani | Terra (@fleece_cannon) June 12, 2024
The SEC Warns the Crypto Industry Through Terraform Labs
The agreement with the SEC includes a return of illicit gains amounting to $3.58 billion and a civil penalty of $420 million. The resolution of this case sets an important precedent regarding the relationship between crypto companies and U.S. regulators. The SEC has openly admitted that the outcome aims to send a clear cautionary message to the crypto industry and firms wishing to operate on U.S. soil.
On the other hand, the shift towards community governance has generated varied reactions within the Terra ecosystem. Some have expressed optimism about a more decentralized and community-controlled model, while others have vehemently criticized past leadership decisions that led to this situation. The proposal to burn unassigned tokens and the call for greater community participation in the governance of Terra and Terra Classic (LUNC) are key aspects of the transition that the blockchain network will face.
Additionally, the impact on the markets has not gone unnoticed. Terra’s native coins, LUNA and LUNC, have experienced declines of 6.87% and 5.2%, respectively, in the last 24 hours following the announcement of the cessation of operations by Terraform Labs.
