Terraform Labs, once a leader in the crypto sector, is facing the final phase of its closure. As part of a multibillion-dollar agreement with the Securities and Exchange Commission (SEC), the company has announced the sale of four of its companies.
This decision marks a crucial step in the liquidation of Terraform Labs’ operations, a process that will bring an end to a significant chapter in the history of criptovalute. Let’s see all the details below.
Crypto news: the closure plan of Terraform Labs
As anticipated, Terraform Labs, the bankrupt crypto company, is looking to sell four of its assets.
This is to fulfill an agreement of 4.5 billion dollars with the United States Securities and Exchange Commission (SEC). The sale is part of a liquidation process of operations, aimed at maximizing value for creditors and stakeholders.
On July 9, Terraform Labs announced that it is actively exploring options to sell the following platforms:
Pulsar Finance: a portfolio monitoring platform acquired in November 2023. Station: a cryptographic wallet platform.
Enterprise: a management platform for decentralized autonomous organizations (DAO) without code, launched in November 2022. Warp: a smart contract automation protocol, with recent updates in February and March.
Terraform filed for bankruptcy under Chapter 11 in Delaware in January, a few months after acquiring Pulsar Finance. The company continues to actively develop both Warp and Station, despite the liquidation process.
The other agreements of Terraform Labs with the SEC
Last month, Terraform reached a $4.5 billion agreement with the SEC. The latter includes the payment of nearly $3.6 billion in compensations, a civil penalty of $420 million, and about $467 million in prejudgment interest.
As part of the agreement, the co-founder and former CEO of Terraform, Do Kwon, has agreed to pay 110 million dollars in compensations, 14.3 million dollars in prejudgment interest, and a civil penalty of 80 million dollars.
Furthermore, the agreement has essentially banned Kwon and Terraform from the cryptocurrency sector. Thus closing the lawsuit filed by the SEC in February 2023 for violations of securities law and fraud.
Terraform has developed Terra Luna Classic (LUNC), a cryptocurrency linked to the algorithmic stablecoin TerraUSD (UST), now called TerraClassicUSD (USTC).
In May 2022, USTC lost its peg to the dollar, causing a collapse in the price of both cryptocurrencies. Currently, the prices of LUNC and USTC are almost completely wiped out.
Even the current token of Terraform, Terra (LUNA), has not shown signs of recovery. Specifically, it fell by 3% in the week to $0.37, with a drop of 98% compared to the peak of May 2022 of $18.87, according to CoinGecko.
Terraform invites those interested in purchasing its assets to contact its investment banker, CAVU Securities, for further information.
Rasgard accuses Do Kwon and Terraform Labs of misconduct in the Terra Luna crisis
The cryptocurrency influencer Rasgard has recently used the platform X
(previously known as Twitter) to report alleged misconduct by Do Kwon and the failed Terraform Labs.
Rasgard accused Kwon of deception and manipulation, claiming that the founder of Terraform Labs always acted with the intent to deceive the public.
According to Rasgard, Kwon orchestrated a secret deal with Jump Trading, which led to the first loss of the UST peg in May 2021. Kwon allegedly deceived the public by claiming that the token “self-repairs automatically” by design.
Furthermore, Rasgard accuses Terraform Labs of falsifying transactions on the Chai payment platform to simulate legitimate activity. Before the collapse, Kwon had even bet 1 million dollars on the price of LUNA and the stability of the UST peg.
The situation further worsened in 2022 when Anchor Protocol, a lending platform based on Terra, started to reduce interest rates for stablecoin deposits.
This reduction has caused a massive exodus of credit institutions, contributing to the loss of the UST peg and the consequent collapse of LUNA.
This event has triggered a wave of concern in the cryptocurrency market and has led to increased regulatory scrutiny of algorithmic stablecoins.
Following these events, Kwon allegedly transferred over 10,000 BTC into a cold wallet, and more than 100 million dollars were reportedly withdrawn from this wallet through a Swiss bank.
Rasgard also states that Kwon moved about 40,000 BTC from the burn wallet to secret wallets. Kwon was subsequently arrested in Montenegro and faces eight charges, including securities fraud, commodities fraud, wire fraud, and conspiracy.
After several postponements, Kwon and his legal team are awaiting extradition to face the trial.