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Terraform Labs (TFL), the company behind the Terra blockchain, is entering its final chapter as it begins winding down operations. According to a post on X, this move follows a settlement with the U.S. Securities and Exchange Commission (SEC) and the impending implementation of a Chapter 11 bankruptcy plan.
Terra Blockchain Evolution Now Rests on Community Developers
As a result, Proposal 4818 will mark the final chain upgrade from TFL, signaling the company’s exit from active involvement in the blockchain’s maintenance and development. As TFL steps back, the Terra blockchain’s future will now be shaped by community-driven initiatives. Among these initiatives is the Phoenix Directive, which has emerged as a leading framework designed to take over maintenance and operational responsibilities.
Proposal 4818 signifies a significant shift for Terraform Labs, signaling a new chapter where the community assumes control. Due to TFL’s legal constraints, the ongoing development of the Terra blockchain now depends primarily on community developers and dedicated leaders who are enthusiastic about the project’s future.
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SEC Seeks Billion in Penalities From Terraform Labs
In April, the US SEC filed a motion requesting billions of dollars in disgorgement and civil penalties against Terraform Labs and its co-founder, Do Kwon, following a verdict in its civil case.
In a filing in the United States District Court for the Southern District of New York, the SEC requested approximately $4.7 billion in disgorgement and pre-judgment interest after the civil case ruling, along with a combined $520 million in civil penalties: $420 million from Terraform and $100 million from Do Kwon.
In addition to the monetary judgment, the SEC was proposed to bar Kwon from serving as an officer or director of a securities issuer and providing complete details of his accounts and assets. Terraform would also face a conduct-based injection to prevent engaging in behavior similar to the fraud that occurred. However, the proposed remedies and civil judgment are pending approval by a Judge.
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Terraform Labs Filed for Chapter 11 Bankruptcy
Recall that the disgraced crypto entrepreneur and his firm were held responsible for the now defunct stablecoin TerraUSD (UST) collapse, causing turbulence in the crypto market. To everyone’s surprise, the firm filed for bankruptcy protection in the United States early this year.
The bankruptcy was filed four days after the U.S. SEC agreed to postpone Do Kwon’s upcoming trial. In February 2023, the two parties were accused of running a multi-billion dollar cryptocurrency fraud involving the UST and Terra (LUNA).
