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Terraform Labs has announced that the organization will shut down following a settlement with the U.S. Securities and Exchange Commission to conclude a fraud case.
“TFL always intended to dissolve at some point and that point is now. We will be winding down operations completely, Chris Amani, the CEO of Terraform Labs said in a post on X.
“We were well positioned to accelerate things if we had won the trial, but unfortunately we lost and as a result, can no longer operate.”
The US$4.47 billion settlement agreement with the SEC announced Wednesday requires Kwon Do-hyung, former CEO of Terraform Labs, to pay US$204 million to the bankruptcy estate.
The settlement is pending approval from U.S. District Court Judge Jed Rakoff.
If approved, Kwon will be banned from cryptocurrency transactions. He will also be prohibited from holding executive positions in public firms.
The settlement comes after Terraform Labs’ stablecoin and its related cryptocurrency, LUNA, collapsed in May of 2022, causing significant disruptions in the cryptocurrency market.
The related fraud cause ranks among the most substantial in the history of the United States.
Kwon, who is currently in custody in Montenegro for using a fake passport, is also dealing with fraud charges from the U.S. Department of Justice and financial crime allegations in South Korea.
The downfall of Terraform’s stablecoin was a pivotal moment in a string of cryptocurrency market disturbances, including the FTX exchange crash.