U.S. Court Approves Terraform Labs’ Plan to Wind Down Operations

A United States Bankruptcy Court has approved Terraform Labs’ request to shut down its operations.

In January, the firm filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The process allows a business to wind down its operations while addressing its debts, giving it time to stabilize its finances and negotiate with creditors.

According to Reuters, Terraform Labs, the creator of the algorithmic stablecoin Terra USD (UST), will pay stakeholders between $184.5 million and $442.2 million as part of its bankruptcy proceedings.

Terraform Labs Settles With SEC for $4.5B

The court approval follows the firm’s agreement to pay $4.7 billion in fines after the U.S. Securities and Exchange Commission (SEC) took action against the firm and its co-founder, Do Kwon.

In February 2023, the financial watchdog charged  Terraform Labs with misleading investors and engaging in fraudulent activities related to the UST stablecoin, which collapsed in 2022, proposing a fine of $5.3 billion. However, Terraform’s legal team argued that a fine closer to $1 million would be fair.

In June 2024, Terraform agreed to settle the SEC’s case with a payment of $4.5 billion in the U.S. District Court for the Southern District of New York. The settlement included $3.58 billion in disgorgement, $420 million in civil penalties, and restrictions preventing Kwon from serving as an officer or director in public companies.

SEC Imposes Over $4.6B in Fines on Crypto Entities

In recent news, CoinTab reported that the financial watchdog has imposed a record $4.68 billion fine on 11 crypto entities this year. The report noted that Terraform Labs paid the largest share, settling $4.5 billion with the SEC.

In another development, trading platform eToro has agreed to pay $1.5 million to settle charges from the SEC for operating as an unregistered broker and clearing agency with its crypto trading services. As part of the settlement, eToro will stop trading all crypto assets except Bitcoin, Bitcoin Cash, and Ethereum.