In a surprising turn of events, Terraform Labs CEO Chris Amani announced that Terra will transition into a community project as the company prepares to wind down following a massive $4.5 billion settlement with the SEC. Amani emphasized the need for the community to step up and take over ownership of the chain, signaling a new chapter for Terra’s future.
Amani revealed that Terraform Labs had always intended to dissolve, and the recent settlement with the SEC has provided the company with the opportunity to do so. While Terraform Labs had initially positioned itself to accelerate its growth in the event of a favorable outcome in the SEC case, the loss in trial has made it impossible for the company to continue operating in its current form.
During the wind-down period, Terraform Labs will continue to operate its existing products. However, the company has decided to sell off some of its assets, including Pulsar Finance, Station Protocol, and Enterprise Protocol. Additionally, Amani announced that Terraform Labs will propose burning all unvested Luna tokens and any vested crypto held in its wallets.
The settlement between Terraform Labs and the SEC has not gone unnoticed in the cryptocurrency industry. Coinbase CEO Paul Grewal criticized the outcome of the case, pointing out that the SEC stands to benefit from the settlement as an unsecured creditor. Grewal expressed disappointment in the lack of relief for fraud victims and questioned the effectiveness of the regulatory process.
Meanwhile, Messari CEO Ryan Selkis voiced his disapproval of the settlement amount and suggested that the funds should be directed towards a victims’ restitution fund rather than the SEC. He went as far as to suggest that SEC Chair Gary Gensler should face severe consequences for the handling of the case.
The majority of the settlement amount will go towards the SEC’s unsecured creditor claim. However, investors who were harmed by the actions of Terra will receive certain assets transferred by Terra’s co-founder and former CEO Do Kwon to the Liquidating Trust. This marks a key step in providing some form of restitution to those affected by the events leading up to the settlement.
The termination of Terraform Labs and the shift towards community ownership represent a significant turning point for the project. As the company winds down its operations, the crypto community will play a vital role in shaping the future of Terra and ensuring the continuity of its products and services. The aftermath of the settlement with the SEC serves as a reminder of the challenges and complexities faced by companies operating in the cryptocurrency space and underscores the importance of regulatory compliance and accountability.