Terraform Labs is shutting down after a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC). CEO Chris Amani announced the company’s decision to cease operations and hand control of the Terra blockchain to the community.
The decision to dissolve follows a significant $4.47 billion settlement with the SEC over the collapse of the algorithmic stablecoin TerraUSD (UST) in 2022. The settlement includes a $3.58 billion disgorgement and a $420 million civil penalty.
Amani, who took over from Do Kwon in July 2023, confirmed the firm’s intent to wind down and burn both unvested and vested holdings. He stated, “Terraform Labs always intended to dissolve at some point, and that point is now.”
Amani revealed plans for the community to propose burning remaining vested tokens and to take over governance of the Terra and Terra Classic blockchains. The transition to community-led governance has received mixed reactions, with some expressing optimism and others critiquing past leadership.
The announcement led to immediate market reactions, with LUNA and LUNC prices dropping by 5% and 2%, respectively. The $4.47 billion SEC settlement marks a significant regulatory milestone, emphasizing the need for compliance and governance in the crypto space.
Terraform Labs’ closure and the handover to the community signal a new chapter for the Terra ecosystem. The move underscores the challenges and regulatory pressures facing the cryptocurrency industry.
The future of Terra now rests in the hands of its community, which must navigate the path forward amid significant market and regulatory scrutiny.