Journalist
Published:
- Terraform Labs has been allowed to close as part of an SEC bankruptcy settlement proceeding.
- Terra Luna Classic and LUNA prices rise after court ruling, reflecting market volatility.
Terraform Labs, the architect of the Terra (LUNA) ecosystem, has officially received the green light from a U.S. bankruptcy court to begin winding down its operations.
The pivotal move follows the company’s recent settlement with the U.S. Securities and Exchange Commission (SEC) over fraud allegations related to the catastrophic collapse of its TerraUSD stablecoin and LUNA token, which collectively wiped out $40 billion in value in 2022.
At a crucial Chapter 11 bankruptcy reorganization hearing on September 19, Judge Brendan Shannon approved Terraform’s plan, deeming it a preferable solution to protracted legal wrangling over investor losses.
What do the reports suggest?
According to the latest Reuters report, Judge Shannon approved Terraform’s bankruptcy plan at a hearing in Wilmington, Delaware, calling it a “welcome alternative” to further litigation over investor losses.
To put things in context, Terraform Labs, which filed for bankruptcy earlier this year, reached a settlement with the SEC for $4.47 billion after a jury found the company guilty of defrauding investors.
However, the SEC will only receive payments from this settlement once Terraform fulfills its obligations to compensate investors for their cryptocurrency losses.
In its latest update, the company said it could not currently estimate the full value of these losses.
In this regard, Reuters said:
“Terraform estimates that it will be able to pay between $184.5 million and $442.2 million to cryptocurrency purchasers and other stakeholders as part of its bankruptcy liquidation.”
Impact on the price of Terra Luna Classic and Tera Luna
Despite the recent developments, Terra Luna Classic (LUNC) price has not shown any negative reaction at first.
At the last update, Terra Luna Classic was trading at $0.00008717, which reflects a 2.22% increase in the last 24 hours.
Meanwhile, Terra Luna (LUNA) saw a slight decline of 0.16%, trading at $0.3924, according to data from CoinMarketCap.
However, shortly after the US court ruling, Terra Luna Classic jumped more than 8%, reaching $0.00008743 and peaking at a 24-hour high of $0.00008829.
Trading volume for Terra Luna Classic also increased by nearly 85%, reaching $26.17 million.
Similarly, LUNA saw a price increase of around 9% to $0.4033, accompanied by a 42% increase in trading volume to $47.12 million.
