Terraform Labs Finally Failed: What’s Next for Investors?
Terraform Labs has officially closed after its bankruptcy plan was approved. The SEC accused the company of fraudulent practices that caused investors to lose $40 billion when TerraUSD and Luna tokens collapsed in 2022. After a lengthy legal battle, the court accepted the bankruptcy plan. The company has agreed to settle with the SEC. Let's examine what lies ahead for investors.
A long legal battle
Terraform Labs suffered a serious setback when its stablecoin, TerraUSD, failed to maintain its value. This collapse, along with the collapse of Luna, resulted in significant losses for many investors. In January 2024, Terraform filed for Chapter 11 bankruptcy, citing liabilities and assets estimated at between $100 million and $500 million.
On September 19, US Bankruptcy Judge Brendan Shannon approved the company's bankruptcy plan. This decision is an important step in solving financial issues. The court described the plan as a “welcome alternative” to protracted legal battles that could have dragged on for years.
Compliance with the SEC
The company has now agreed to a $4.47 billion settlement with the SEC, but the commission may receive much less. The Securities and Exchange Commission has demanded that the investors be paid after filing their bankruptcy claims. But many questions remain as to how much this will happen to investors.
What's in store for Terraform investors?
Terraforms will begin liquidating the assets after court approval. This is an important step to bring back the investors who were affected by the collapse. Terraform gives investors and other stakeholders estimates of $184.5 and $442.2, respectively. Investors are still worried about getting their money, even though some feel hopeful for a slight increase in the price of $LUNA and $LUNC.
The failure of many crypto companies and their tokens highlights the importance of thorough research before making a financial decision to invest in them. The road ahead is uncertain, but the lessons learned are valuable.
Also Read: SEC Vs. Consensys: Ethereum Wins, MetaMask Fight Heats Up
