Chris Amani, CEO of Terraform Labs, has announced that the firm will cease operations following a $4.47 billion settlement with the United States Securities and Exchange Commission.
The company plans to sell key projects within the Terra ecosystem and give the community control of the Terra blockchain.
“[Terraform Labs] always intended to dissolve at some point and that point is now. We will be winding down operations completely. [...] We were well positioned to accelerate things if we had won the trial, but unfortunately, we lost and as a result, can no longer operate.”
Related: Terraform to pay $4.47B to resolve SEC civil lawsuit
Decision to dissolve
Terraform Lab’s decision to dissolve follows its $4.47 billion settlement with the SEC regarding the historic collapse of the algorithmic stablecoin TerraUSD (UST) in 2022.
The settlement includes a substantial $3.58 billion disgorgement — giving up profits obtained illegally or unethically — and a civil penalty of $420 million.
Having taken over from Do Kwon in July 2023, Amani confirmed the firm’s intent to wind down operations and burn unvested and vested holdings.
“@evan_docs will shortly post a community proposal to burn all of [Terraform Labs] unvested Luna. Anything that remains vested in our wallets will be burned by [Terraform Labs].”
Related: Terraform, Do Kwon to reach fraud settlement with SEC
Community to take the reins
Amani also highlighted plans for a community proposal to burn remaining vested tokens and the need for community-led governance of the Terra and Terra Classic blockchains.
The decision to hand the reins to the community elicited mixed reactions from the community — some expressing optimism, others critiquing past leadership.
While most supported the community shift toward Terra Classic, one community member’s response to Amani’s X post starkly critiqued the decision.
Related: Montenegrin Justice Minister discussed Do Kwon’s case with SEC
Market and regulatory implications
Terraform Labs’ decision to dissolve has resulted in the prices of LUNA (LUNA) and LUNC falling by 5% and 2% within the last 24 hours.
The $4.47 billion SEC settlement sets a significant regulatory precedent for actions taken in the crypto space and highlights to push for regulatory compliance and governance.
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