Terraform Labs to dissolve, CEO asks community to take over following $4.47 billion SEC settlement

Chris Amani, CEO of Terraform Labs, the developer of Terra LUNA -1.53% blockchain, asked the community to take the reins as the firm plans to dissolve its operations. The firm, according to Amani, plans to sell its projects in the Terra ecosystem including Pulsar Finance, Station Wallet and Enterprise DAO.

This follows Terraform's massive $4.47 billion settlement with the U.S. Securities and Exchange Commission related to the UST algorithmic stablecoin, which dramatically collapsed in 2022.

"TFL always intended to dissolve at some point, and that point is now,” Amani stated on X, signaling the end for Terraform Labs. “We will be winding down operations completely.”

Amani stated the firm plans for a community proposal that would lead to the burning of all unvested Luna, Terraform’s native token. “Anything that remains vested in our wallets will be burned by TFL,” he affirmed, committing to a decisive end for the company’s direct involvement with the token.

He stated that Terra and Terra Classic blockchains could continue under the community’s control. “The community will need to take over ownership of the chain,” Amani stated, suggesting a community-led governance model that could redefine how blockchain projects operate post-crisis.

The SEC initially charged Terraform and its co-founder, Do Kwon, in February 2023, accusing them of misleading investors and violating federal securities laws by engaging in fraudulent activities related to the sale of unregistered securities.

Terraform’s proposed settlement revealed on Wednesday with SEC includes $3.58 billion in disgorgement and a $420 million civil penalty. It also prohibits Kwon from serving as an officer or director of any public company. Additionally, Do Kwon is required to contribute about $204 million to a bankruptcy estate for Terraform aimed at compensating the investors harmed by the scheme.

Amani, Terraform's former COO, took over from Kwon in July 2023. Terraform filed for Chapter 11 bankruptcy in a Delaware court in January.