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In a significant development in Terraform Labs’ (TFL) ongoing bankruptcy proceedings, a recent court order has authorized several key actions for the troubled crypto company.
Terraform Labs, which was found liable for defrauding investors and causing losses of approximately $40 billion with the collapse of its TerraUSD and LUNA tokens in 2022, aims to address key aspects of its operations and settlements as it navigates through the bankruptcy process.
Reopening Of Shuttle Bridge And LUNA Token Burning
As announced on Friday by the company, the court order enables Terraform Labs to reopen the Shuttle bridge, a component of the Terra network that facilitates the transfer of Terra assets to Ethereum (ETH), Binance Smart Chain (BSC), and Harmony in exchange for wrapped tokens.
TFL plans to relocate all assets held in Shuttle Bridge wallets to more secure wallets and provide users with a simplified interface for redeeming wrapped assets until 30 days after the effective date of TFL’s proposed Chapter 11 plan.
Following this period, TFL intends to permanently shut down the Shuttle bridge, with any remaining assets being burned. Additionally, Terraform Labs announced its intention to undelegate and burn the 150 million LUNA tokens received from the Terra Community Grant.
In compliance with the bankruptcy court order and the settlement reached between TFL and the US Securities and Exchange Commission (SEC), TFL will also initiate the un-delegation process for the 125 million LUNA currently staked with the 49 validators selected by the Terra Delegation Committee.
Once the LUNA has been undelegated, both the 125 million LUNA used for delegations and the 25 million LUNA allocated for liquidity provisioning will be burned, according to the company’s announcement.
Terraform Labs To Wind Down Operations
This bankruptcy court order comes as Terraform Labs, embroiled in a long legal battle with the SEC, has decided to dissolve its operations following a settlement agreement. The settlement, amounting to $4.47 billion, ended over a year of intense legal proceedings.
As reported by Bitcoinist, TFL’s CEO Chris Armani, in a social media post on X (formerly Twitter), expressed disappointment over the trial outcome but confirmed the company’s plan to wind down operations and transfer ownership of the chain to the community.
On the other hand, Terraform’s former CEO Do Kwon, sought by the United States and South Korea for his involvement in capital markets and securities fraud, also faced legal complications.
The Supreme Court of Montenegro overturned Do Kwon’s extradition to South Korea in April, referring the case to the Higher Court in Podgorica. The Higher Court will now determine if the extradition’s legal conditions have been met, with the final decision resting with the justice minister.
At the time of writing, LUNA has seen a 2% decline in the 24-hour time frame, bringing the token down to $0.000088. However, LUNA still records gains of 24% and 32% in the seven and fourteen-day time frames.
Featured image from DALL-E, chart from TradingView.com
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