On September 19, Terraform Labs, the entity behind the Terra blockchain protocol, received court approval to wind down its operations as part of its bankruptcy proceedings.
Court Decision
During a pivotal hearing on Thursday, U.S. Bankruptcy Judge Brendan Shannon approved the firm's plan to exit Chapter 11 bankruptcy in Wilmington, Delaware. This decision marks a crucial point in Terraform Labs' ongoing legal challenges and financial troubles.
Settlement with SEC
According to Reuters, Terraform Labs also reached a settlement with the U.S. Securities and Exchange Commission (SEC). Judge Shannon described the resolution as a “welcome alternative” to prolonged litigation, following the company’s significant financial losses and the impact on investors.
Compensations and Next Steps
With the bankruptcy wind-down, Terraform Labs is expected to distribute between $184.5 million and $442.2 million to its creditors and stakeholders. The company's current CEO, Chris Amani, disclosed in June via X that the company had always intended to dissolve and is now in the final stages of closing its operations.
The company acknowledged that estimating the total value of cryptocurrency losses to be repaid during the liquidation process is “impossible.” The figures released are only approximations, with the exact amounts remaining unclear.
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