Terraform Labs has announced plans to shut down several of its products and services by October 30, unless third parties step in to take them over.
The company issued this warning on September 25 as part of its winding down process, following its settlement with the U.S. Securities and Exchange Commission (SEC) in June.
Terraform noted that discussions with potential buyers are ongoing, but time is running out. The company listed four services and four products that are currently under negotiation, including the Luna Foundation Guard, its blockchain explorer, and API services.
CEO Chris Amani had previously outlined the company’s intentions in June, following the SEC settlement. He expressed pride in Terraform’s innovations, but acknowledged that losing the trial meant the company could no longer continue operating as before.
The Terraform community will be asked to step in and take over some of the network’s basic services, including ownership of the chain. It remains to be seen if any third-party buyers will take over other assets before the October 30 deadline.
Terraform Labs was one of the first major crypto platforms to fail in 2022, following the collapse of its algorithmic stablecoin, UST. The instability of UST and claims made by Terraform’s founders about the blockchain’s potential use cases were cited as key factors in its downfall. The company’s collapse was followed by other crypto firms such as BlockFi, FTX, and Celsius filing for bankruptcy later in the same year.
In April 2024, a judge ruled that Terraform and Kwon were liable for defrauding investors and ordered them to pay roughly $4.5 billion in fines and penalties to the SEC. During the bankruptcy hearing on Sept. 19, Terraform reportedly suggested that it could pay between $185 million and $442 million as part of the winding-down process, although it acknowledged that total losses remain “impossible to estimate.”
It remains unclear whether many of Terraform’s investors will be fully compensated for their losses.
Terraform’s founder Do Kwon has not attended any of the SEC or bankruptcy proceedings in person. He was arrested in Montenegro in 2023 for using falsified travel documents and served a four-month prison sentence.
Under the terms of the settlement with SEC, Terraform Labs agreed to pay $4.47 billion, which includes $3.58 billion in disgorgement and a $420 million civil penalty. The agency had sought to impose a $5.3 billion penalty, its largest fine yet on a cryptocurrency project.
The settlement also prohibits co-founder Do Kwon from serving as an officer or director of any public firm. On his part, Do Kwon is personally responsible for $110 million in disgorgement penalties and roughly $14.3 million in prejudgment interest, as per the settlement agreement.
