With the recent $4.5 billion SEC settlement, Terraform Labs CEO Chris Amani has made the decision to wind down the company and transition Terra into a community project. Amani emphasized the need for the community to take over ownership of the chain, signaling a shift in direction for the project. This move indicates a decentralization of power and control, allowing different teams and developers to step in and drive the project forward. The intention to dissolve Terraform Labs has always been on the horizon, and now, with the settlement outcome, the company can expedite this process.
During the wind-down period, Terraform Labs will continue to operate its products, albeit with the intention of selling off key assets such as Pulsar Finance, Station Protocol, and Enterprise Protocol. Amani also announced plans for TFL to propose burning all unvested Luna and any vested crypto in its wallets. This strategic move aims to streamline operations and redistribute resources in light of the company’s impending dissolution.
Industry Reaction to the Settlement
The settlement between Terraform Labs and the SEC has stirred reactions within the industry, with Coinbase CEO Paul Grewal criticizing the outcome. Grewal highlighted the advantages for the SEC, making them an unsecured creditor and directing funds towards the agency through the bankruptcy proceedings. The call for Terra’s co-founder and former CEO Do Kwon to surrender $7 million in assets adds another layer of complexity to the situation. Grewal’s comments reflect a sense of disillusionment with the regulatory process, pointing out the lack of meaningful relief for fraud victims.
Ryan Selkis, CEO of Messari, also expressed dissatisfaction with the settlement amount, advocating for a victims’ restitution fund to receive the funds instead of the SEC. The strong sentiments conveyed by Selkis suggest a growing sentiment of mistrust towards the regulatory bodies and their handling of such cases. The call for SEC Chair Gary Gensler to face severe consequences in the event of an unfavorable outcome highlights the frustration and disillusionment prevalent within the industry.
While the majority of the settlement amount is directed towards the SEC as an unsecured creditor, investors who have been harmed will receive certain assets that Kwon transfers to the Liquidating Trust. This provision aims to compensate those who have suffered losses due to the actions of Terraform Labs, providing a semblance of restitution in the aftermath of the settlement. The process of asset redistribution and compensation will play a crucial role in rebuilding trust and restoring confidence within the investor community.
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