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Reading: Terraform Labs to Cease Operations After Bankruptcy, Offers Payments for Terra Stablecoin Collapse
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Deythere > News > News > Terraform Labs to Cease Operations After Bankruptcy, Offers Payments for Terra Stablecoin Collapse
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Terraform Labs to Cease Operations After Bankruptcy, Offers Payments for Terra Stablecoin Collapse

depicting the bankruptcy and shutdown of Terraform Labs after the Terra stablecoin collapse. Include the logos of Terraform Labs and Ter
Thalia Galanis
Last updated: September 20, 2024 9:10 am
By
Thalia Galanis
Published September 20, 2024
3 Min Read
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Terraform Labs, the developer behind the algorithmic stablecoin Terra, has announced its decision to cease operations following its bankruptcy court proceedings. The company plans to offer payments between $184.5 million and $442.2 million to its creditors as part of its settlement.

Contents
Terraform Labs Halts Operations Post-BankruptcySEC Clarifies Position on Remaining ClaimsAftermath of the Terra USD CollapseSettlement and Penalties: A Lengthy Legal Battle

Terraform Labs Halts Operations Post-Bankruptcy

In a significant development, Terraform Labs, the company behind the notorious Terra stablecoin, has declared that it will cease its operations. This decision follows the bankruptcy process in which a detailed plan was laid out to compensate the company’s creditors. Terraform Labs aims to settle its liabilities by offering payments ranging from $184.5 million to $442.2 million.

SEC Clarifies Position on Remaining Claims

The SEC has clarified its position, stating that its claims against Terraform Labs will be addressed after payments to unsecured creditors and investors are completed. The SEC commented, “Under Terraform’s Chapter 11 Plan, all affected investors and unsecured creditors will be fully compensated before the SEC’s claims are addressed.” This statement emphasizes the priority given to affected individuals before regulatory demands are handled.

representing the bankruptcy and closure of Terraform Labs following the Terra stablecoin collapse. Show the Terraform Labs logo alongsid

Aftermath of the Terra USD Collapse

The collapse of Terra USD (UST), the stablecoin developed by Terraform Labs, led to significant scrutiny and a high-profile lawsuit initiated by the SEC in February 2023. The regulatory body accused Terraform Labs and its founder, Do Kwon, of defrauding investors during UST’s collapse. The legal battle centered around the financial penalties to be imposed.

Settlement and Penalties: A Lengthy Legal Battle

Throughout the court proceedings, Terraform Labs and the SEC were at odds over the amount of penalties. While Terraform argued for a $1 million fine, the SEC demanded $5.3 billion in penalties. The matter was resolved in June when Terraform Labs agreed to a massive $4.7 billion settlement. This settlement requires the company to return $3.58 billion and pay an additional $420 million in fines. The size of the settlement highlights the severity of the collapse and its far-reaching impact on crypto markets and investors.

The conclusion of Terraform Labs’ bankruptcy marks a pivotal moment in the history of the Terra USD collapse. The settlement plan not only aims to provide substantial compensation to those affected but also ensures regulatory compliance as dictated by the SEC. As Terraform Labs winds down its operations, this chapter serves as a stark reminder of the risks in the growing crypto market, emphasizing the need for caution as the market continues to evolve.

Terraform Labs bankruptcy, Terra USD collapse, SEC lawsuit, Do Kwon, creditor payments

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