Chris Amani, CEO of Terraform Labs, has announced that the firm will cease operations following a $4.47 billion settlement with the United States (U.S.) Securities and Exchange Commission (SEC).
The company plans to sell key projects within the Terra ecosystem and give the community control of the Terra (LUNA) blockchain.
“[Terraform Labs] always intended to dissolve at some point and that point is now. We will be winding down operations completely [...] We were well positioned to accelerate things if we had won the trial, but unfortunately, we lost and as a result, can no longer operate.”
Related: Terraform to pay $4.47B to resolve SEC civil lawsuit
Decision to dissolve
Terraform Lab’s decision to dissolve follows the $4.47 billion settlement with the SEC regarding the historic collapse of the algorithmic stablecoin UST in 2022.
The settlement includes a substantial $3.58 billion disgorgement — giving up profits obtained illegally or unethically — and a civil penalty of $420 million.
Having taken over from Do Kwon in July 2023, Amani confirmed the firm’s intent to wind down operations and burn unvested and vested holdings.
“@evan_docs will shortly post a community proposal to burn all of [Terraform Labs] unvested Luna. Anything that remains vested in our wallets will be burned by [Terraform Labs].”
Related: Terraform, Do Kwon to reach fraud settlement with SEC
Community to take the reins
Amani also highlighted plans for a community proposal to burn remaining vested tokens and the need for community-led governance of the Terra and Terra Classic (LUNC) blockchains.
The decision to hand the reins to the community elicited mixed reactions from the community — some expressing optimism, others critiquing past leadership.
While most supported the community shift toward LUNC, one community member’s response to Amani’s X post starkly critiqued the decision.
Related: Montenegrin Justice Minister discussed Do Kwon’s case with SEC
Market and regulatory implications
Terraform Labs’ decision to dissolve has resulted in the prices of LUNA and LUNC falling by 5% and 2% within the last 24 hours.
The $4.47 billion SEC settlement sets a significant regulatory precedent for actions taken in the crypto space and highlights to push for regulatory compliance and governance.
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