Terraform Labs, once a prominent entity in the digital asset market, is undergoing significant restructuring by selling off four key businesses as part of a $4.5 billion settlement with the U.S. Securities and Exchange Commission (SEC). This decision marks a pivotal shift as the company prepares to wind down its operations entirely.
The businesses slated for sale include Terraform’s crypto wallet platform, Station, the portfolio tracking platform Pulsar Finance, the smart contract automation tool Warp, and the no-code DAO management platform Enterprise. These moves are driven by the necessity to comply with SEC settlement terms, following Terraform’s Chapter 11 bankruptcy filing last year after acquiring Pulsar Finance.
Despite financial struggles, Terraform Labs continued to develop and update its platforms, with recent updates to Warp and Station released in early 2024. The planned sales are aimed at maximizing value for stakeholders and creditors amidst the winding down process initiated post-settlement.
Terraform Labs Initiates Restructuring with $4.5 Billion SEC Settlement and Asset Sales
The $4.5 billion settlement requires Terraform Labs to pay significant sums in disgorgement, prejudgment interest, and civil penalties. Co-founder and former CEO Do Kwon also faces substantial penalties and is barred from further involvement in the crypto industry, concluding a legal battle initiated by the SEC in February 2023 for securities fraud.
Terraform’s woes began in May 2022 when its stablecoin, TerraUSD (UST), lost its peg to the U.S. dollar, causing substantial losses for investors. The value of its associated cryptocurrency, Terra Luna Classic (LUNC), also plummeted. Currently, Terra’s token value remains sharply devalued, trading at around $0.37 compared to its peak of $18.87.
As Terraform Labs moves through its wind-down phase, potential buyers are invited to engage through its investment banker, CAVU Securities, aiming to fulfill obligations to creditors and stakeholders while bringing closure to this turbulent period in its history.
