- The bankrupt cryptocurrency company Terraform Labs has disclosed its intention to sell four of its companies to the US Securities and Exchange Commission (SEC) for a sum of $4.5 billion.
The four companies that Terraform Labs is trying to sell include the no-code decentralized autonomous organization (DAO) administration platform Enterprise, the cryptocurrency wallet platform Station, the portfolio tracking platform Pulsar Finance, and the smart contract automation protocol Warp.
Just before declaring Chapter 11 bankruptcy in January of 2023, Terraform purchased Pulsar Finance in November of that same year.
Terraform Is Still Working on Warp Protocol
The Warp protocol and Station wallet are still being actively developed by Terraform Labs in spite of its financial challenges.
In accordance with the conditions of its SEC settlement, the company said that the sale of these operations is a component of a larger plan to optimize value for its stakeholders and creditors.
Notoriety for Terraform Labs came from the creation of the cryptocurrency Terra Luna Classic (LUNC), which is linked to the algorithmic stablecoin TerraUSD (UST).
The prices of USTC and LUNC, however, began to decline in May 2022 when UST lost its link to the US dollar. Since then, both tokens have practically lost all of their worth.
In addition to erasing over $40 billion from the market, Terra’s failure devastated the cryptocurrency ecosystem and sent numerous crypto hedge funds that had given the company collateral to ruin.
In a legal case initiated by the SEC, a jury found Terraform Labs and co-founder Do Kwon guilty of misleading investors in April 2024.
The company’s current token, Terra, is now trading at $0.37; the announcement of the sale had no discernible effect on its price.
However, since reaching its highest point of $18.87 in May 2022, the token has seen a considerable decrease.
Regarding the possible acquisition of its businesses, Terraform Labs has extended an invitation to interested parties to get in touch with its investment banker, CAVU Securities.
$4.5 billion Terraform and Do Kwon Settlement approved by the judge
The Southern District of New York (SDNY) U.S. District Court Judge Jed Rakoff accepted a settlement this month that will force Terraform Labs and Kwon to pay an astounding $4.5 billion in disgorgement and civil penalties.
They will also be prohibited from ever again transacting in any cryptocurrency asset securities, including tokens that are part of the Terra ecosystem.
The SEC initially proposed a $5.3 billion fine, which Terraform Labs disputed by arguing for a maximum fine of $1 million. This led to the settlement.
Ultimately, on June 6, the legal representatives of Kwon and Terraform Labs agreed to accept the revised $4.5 billion settlement offer from the SEC.
It is significant to remember that Kwon did not attend the trial where the settlement was negotiated. He is currently being held in detention in Montenegro while his extradition is being considered.
With its operations presently protected by Chapter 11 bankruptcy, Terraform Labs must figure out how to pay the settlement’s significant financial commitments.
Terraform Labs’s current CEO, Chris Amani, said throughout the trial that the company has assets worth about $150 million.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
