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Terraform Labs, the company headed by criminally charged Do Kwon that caused the million-dollar crypto crash in 2021, announced that it will restrict US users from accessing certain products and features starting next week.
The move is a response to the Securities and Exchange Commission’s injunctions following a court ruling against the firm and its former CEO, Do Kwon, who is still held back in Montenegro.
Key Restrictions and Regulatory Compliance
The SEC has proposed a conduct injunction that may require Terraform Labs to limit its operations within the US. This could involve geoblocking or restricting US users from accessing specific products and services.
However, Terraform Labs has not yet provided detailed information on which features will be affected.
Withdrawing Liquidity and Restructuring
Terraform Labs will withdraw $23.8 million in liquidity from various platforms, including Astroport, Ura, and White Whale. The withdrawals, scheduled for April 26, involve several LUNA pairs.
This liquidity shift is a measure taken by Terraform Labs to restructure its capital following the SEC’s ruling, suggesting further changes to come. Earlier this year, a court found Terra and its former CEO, Do Kwon, liable for fraud following a trial that began in March 2023.
The SEC has proposed penalties totalling $5.3 billion, marking one of the most substantial fines in the history of the cryptocurrency industry. The fines include a $4.2 billion disgorgement penalty and additional civil penalties for both Terraform Labs and Do Kwon.
Continued Legal Challenges and US Restrictions
Terraform Labs’ compliance with the SEC’s expected injunction will likely shape the company’s future activities within the US. The SEC’s ruling has significant implications, particularly for US-based users.
Following its Chapter 11 bankruptcy in January 2023, Terraform Labs has faced ongoing financial struggles, and this latest ruling further complicates its operational capabilities.
Wider Industry Impact
The Terraform Labs ruling has broader implications for the cryptocurrency industry. It highlights regulatory compliance and the potential for stricter enforcement by the SEC.
These recent developments could set a precedent for other companies operating within the cryptocurrency space, emphasizing the importance of adhering to regulatory frameworks.