Terraform Labs, the creator of the Terra (LUNA) ecosystem, has received court approval to wind down operations after settling fraud allegations with the U.S. SEC related to the collapse of its TerraUSD stablecoin and LUNA token, which caused $40 billion in losses in 2022.
U.S. Bankruptcy Judge Brendan Shannon’s approval provides an alternative to lengthy litigation. Initially, the SEC sought $4.47 billion from Terraform, but it may recover little, as the focus is on compensating affected investors first.
The bankruptcy plan aims to reimburse investors between $184.5 million and $442.2 million, a figure far lower than total losses, leaving many stakeholders dissatisfied.
The SEC’s charges included misleading claims about TerraUSD’s stability. Terraform and its founder, Do Kwon, were found liable for civil fraud.
Additionally, Three Arrows Capital’s liquidators have filed a $1.3 billion lawsuit against Terraform, alleging market manipulation.
As Terraform navigates bankruptcy, Kwon faces extradition proceedings in Montenegro following his 2022 arrest, with the U.S. and South Korea seeking his extradition due to his involvement in the fraud and collapse of the Terra ecosystem.
The likelihood of the United States entering a recession in 2025 has dropped significantly, according to the latest market data from prediction platform Polymarket, where recession odds have fallen to just 22%, marking a notable decline from earlier highs in April and May.
A recent poll reveals that over 70% of U.S. crypto investors support President Donald Trump’s current approach to digital asset policy, reflecting growing optimism within the sector.
U.S. President Donald Trump has officially signed his sweeping policy bill into law, enacting one of the most consequential pieces of legislation of his presidency.
The long-awaited creditor repayments from bankrupt crypto exchange FTX have hit a major roadblock, with the FTX Recovery Trust announcing a temporary suspension of payments to users in 49 foreign jurisdictions.