luna burning
  • The Terra network, led by Do Kwon, collapsed in May 2022, leading to a $4.47 billion SEC settlement and the dissolution of Terraform Labs.
  • Current CEO Chris Amani announced the company will wind down, selling key projects and proposing community governance to steer the future of Terra.

The rise and fall of the Terra network, led by Do Kwon, is a story of dramatic highs and devastating lows in the world of cryptocurrency. After a rapid ascent to prominence, the Terra ecosystem crumbled spectacularly in May 2022, erasing the life savings of countless investors. The U.S. Securities and Exchange Commission (SEC) intervened in February 2023, suing Kwon and Terraform Labs for selling unregistered securities and deceiving investors. This legal battle culminated in a monumental $4.47 billion settlement approved by Judge Jed Rakoff on June 13, 2024.

Terraform Labs To Dissolve

As part of the settlement, Terraform Labs, the company at the heart of the $40 billion collapse of LUNA and UST, must cease operations and submit a Chapter 11 liquidation plan. Chris Amani, the current CEO, announced that the firm will dissolve, inviting the community to take over the Terra network. “Terraform Labs always intended to dissolve at some point, and that point is now,” Amani stated on X (formerly known as Twitter).

The SEC’s victory in this case was a significant blow to Kwon and Terraform Labs. A jury found them guilty of securities fraud through misleading statements about Terra’s success and the stability of UST/LUNA. Despite once being well-positioned to drive the Terra ecosystem forward, this legal defeat left the company unable to continue operations.

Amani revealed that Terraform Labs will sell several key projects, including the portfolio manager Pulsar Finance, the Cosmos wallet Station, and the Enterprise Protocol, which is designed for creating DAOs within Cosmos. He emphasized that the Terra and Terra Classic blockchains could persist under community governance, proposing a model that might redefine how crypto projects operate after such crises.

Additionally, Amani mentioned plans for a community proposal to burn all remaining vested LUNA tokens held by the company. This proposal aims to put the control and future direction of the Terra network firmly in the hands of its community.

Amani’s leadership tenure at Terraform Labs began in July 2023, following Do Kwon’s deepening legal troubles. Despite his efforts to steer the company through tumultuous times, the decision to dissolve marks a definitive end to Terraform Labs’ operations. The prices of LUNA and LUNC have already seen declines of 5.6% and 4.8%, respectively, in the wake of this announcement.

Looking ahead, Amani promises further updates and actions once court approvals are secured, suggesting that while Terraform Labs’ chapter may be closing, the Terra community’s story is far from over. The path forward will depend on the collective efforts and decisions of the remaining Terra community, as they navigate the complex landscape left in the wake of this landmark settlement.