TerraForm Labs Receives Regulatory Approval to Wind Down All Crypto Businesses

The court ruling has approved TerraForm Labs to liquidate all of its business operations and pay a fine to the American securities regulatory body.

TerraForm Labs is a South Korea-based crypto firm. This firm is responsible for creating the Terra (LUNA) and TerraUSD cryptocurrencies and stablecoins. Unfortunately, both digital assets collapsed under high volatility in the market. In 2023, the United States Securities and Exchange Commission (SEC) imposed multiple charges against TerraForm Labs and its co-founders.

In the latest developments, U.S. Bankruptcy Judge Brendan Shannon approved TerraForm Labs’ bankruptcy plan, describing it as a “welcome alternative” to prolonged litigation. The approval follows a settlement with the SEC, where TerraForm Labs agreed to pay nearly $4.5 billion in disgorgement and civil penalties.

Experts noted that the SEC is expected to collect only a small fraction of this amount, as the payment will be made after the company complete the digital asset loss claims by investors and stakeholders.

According to rough estimates, TerraForm leadership will be able to pay between $184.5 million and $442.2 million to crypto investors and other stakeholders as part of its bankruptcy liquidation.

Do Kwon & Delay

The core co-founder of TerraForm Labs was Do Kwon. After the collapse of the Terra crypto empire, he fled his country for Montenegro. In Montenegro, he was caught by local police with forged documents. Later this year, Montenegro authorities released him for extradition to his native country.

Nearly a year of delay occurred due to conflicts between U.S. and South Korean officials, as both countries were seeking his extradition.

Now it seems everything is clear, but a very big question remains: Will all the people who suffered big losses be compensated, and what about the dozens of people who tragically committed suicide because of their losses in the LUNA coin?

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