Terraform Labs Receives Approval to Shut Down Operations

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Terraform Labs was granted court approval to dissolve its operations in bankruptcy yesterday.

This came after the company reached a settlement with the US Securities and Exchange Commission (SEC) over a lawsuit accusing them of defrauding investors of the TerraUSD and Luna tokens, which collapsed in 2022 leading to an estimated $40 billion in losses.

US Bankruptcy Judge Brendan Shannon gave the green light for Terraform’s bankruptcy plan during a hearing in Wilmington, Delaware, stating that it was a favorable alternative to continuing with legal proceedings surrounding the losses suffered by investors.

In January, Terraform declared bankruptcy and later agreed to a $4.47 billion settlement with the SEC after a jury in Manhattan found it guilty of defrauding investors in April.

However, it is uncertain how much the SEC will be able to recover from this settlement as they will only receive payment once Terraform has settled crypto loss claims as part of its bankruptcy proceedings.