According to TechFlow, Terraform Labs has obtained approval from the Delaware Court to end its operations through bankruptcy procedures.

Previously, the company agreed to settle a lawsuit from the U.S. Securities and Exchange Commission (SEC). The SEC accused Terraform Labs of defrauding cryptocurrency investors in the 2022 TerraUSD and Luna token collapse, resulting in approximately $40 billion in losses. Bankruptcy Judge Brendan Shannon called the plan a "welcome alternative" to further litigation. Terraform Labs filed for bankruptcy in January this year and agreed to a $4.47 billion settlement with the SEC after being found guilty of defrauding investors by a Manhattan jury in April. However, it may be difficult for the SEC to receive the money because, under the bankruptcy liquidation agreement, it will only be paid after Terraform satisfies its cryptocurrency loss claims. The company estimates that between $184.5 million and $442.2 million can be paid to cryptocurrency buyers and other stakeholders during the bankruptcy liquidation process.

The SEC accused Terraform and founder Do Kwon of misleading investors about the stability of TerraUSD and falsely claiming that its blockchain was used in a popular mobile payment app in South Korea. Do Kwon currently faces criminal charges in the United States and South Korea, but he denies any wrongdoing.