- Bankruptcy Plan Approval
- Do Kwon's Responsibility and Settlement Details
- Payment Details and Future Steps
Terraform Labs has received the green light from a U.S. bankruptcy court to begin winding down its operations following the resolution of a prolonged legal case with the U.S. Securities and Exchange Commission (SEC), according to reports from September 19.
Bankruptcy Plan Approval
U.S. Bankruptcy Judge Brendan Shannon approved Terraform’s bankruptcy plan, which he described as a “welcome alternative” to ongoing litigation regarding investor losses. This marks the final stage of Terraform’s bankruptcy process, which began in January. In April, a jury found Terraform liable for investor fraud—leading to a settlement with the SEC in which the company agreed to pay a large fine of $4.47 billion.
Do Kwon's Responsibility and Settlement Details
Terraform’s co-founder, Do Kwon, was personally held responsible for $110 million of the settlement amount, with an additional $14.3 million in prejudgment interest. He must also transfer various assets, including ownership stakes in certain tokens (PYTH), to help repay affected investors. These assets will be part of the liquidating trust used to compensate affected investors.
Payment Details and Future Steps
Interestingly, the settlement payment to the SEC will only be made after all claims in the liquidation process are addressed. This means that there’s a chance the SEC may not receive the full settlement amount. The company estimates it could distribute between $184.5 million and $442.2 million to cryptocurrency buyers and other stakeholders. However, the exact extent of eligible losses remains unclear. In early September, the company began preparations for this wind-down by transferring approximately $63 million in Bitcoin (BTC) to a new wallet address.
Thus, Terraform Labs is moving towards the final stage of its operation, focusing on compensating affected investors after the collapse of the Terra ecosystem in 2022.
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