Terraform Labs Receives Court Approval to Suspend its Operations
Terraform Labs has received permission to begin winding down its operations as part of a bankruptcy process after reaching a settlement agreement with the US Securities and Exchange Commission (SEC).
This comes after the company’s Terra ecosystem collapsed in May 2022, resulting in legal disputes and investigations.
During a hearing in a Delaware court, Judge Brendan Shannon approved the company’s plan, citing it as a more viable option than pursuing further legal action.
The accusations against Terraform Labs centered around allegations of fraud against cryptocurrency investors, who suffered losses of approximately $40 billion due to the collapse of the terrausd and Luna cryptocurrencies.
The SEC claimed that the company and its founder, Kwon Do-Hyung (also known as Do Kwon), deceived investors about the stability of terrausd and made false statements about the use of its blockchain in a popular South Korean payment platform.
After a trial, Terraform Labs agreed to pay $4.47 billion to settle these fraud charges with the SEC.
