front pageBlockchainTerraform dismisses CEO, calls for community takeover over $44.7 billion SEC settlement

Terraform dismisses CEO, calls for community takeover over $44.7 billion SEC settlement

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Key points:
Terraform Labs to Pay $4.7B SEC Settlement for Terra Collapse
Kwon will be personally liable for $204 million in fines and interest
CEO Chris Amani calls for community takeover


Terraform Labs
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LUCKNOW (CoinChapter.com) — Terraform Labs will dissolve its operations after reaching a $4.7 billion settlement agreement with the U.S. Securities and Exchange Commission (SEC), ending a long-running case regarding the 2022 UST algorithmic stablecoin collapse that resulted in an estimated $40 billion in losses.


source:
X
Chris Amani took over as CEO of Terraform Labs from co-founder Do Kwon in July 2023. Now, he has announced plans to completely cease operations at the company. In a statement on X, Amani called on the Terra community to take over, saying:
Terraform Labs to sell key projects
Amani also revealed that Terraform Labs plans to sell its projects within the Terra ecosystem, including Pulsar Finance, Station Wallet, and Enterprise DAO. In addition, he proposed a community-led initiative to burn all unfrozen Luna tokens. The company will burn the remaining unfrozen tokens in the Terraform Labs wallet.
The total settlement amount includes approximately $3.6 billion in disgorgement penalties, $420 million in civil penalties, and nearly $46.7 million in prejudgment interest.


Page 8 of SEC settlement filing. Source:
Court Listener
Former Terraform Labs CEO Scepter will be personally liable for $1.1 billion in disgorgement penalties, $80 million in civil penalties, and approximately $14.3 million in prejudgment interest. Scepter will have to pay approximately $204 million to the Terraform Labs bankruptcy trust to compensate harmed investors.
According to the settlement documents, Sceptre must transfer $4.7 million into an agreed-upon escrow account within 30 days of the issuance of the final judgment. In addition, all crypto assets belonging to the Luna Foundation Guardians and Sceptre, as well as all Pyth Network (PYTH) tokens held by Sceptre, will be transferred to pay the restitution penalty and prejudgment interest.
Can community-led governance sustain blockchain?
Terraform Labs is on the path to dissolution. However, Amani suggested that the Terra and Terra Classic blockchains could continue to operate under community control. He may be redefining how blockchain projects operate post-crisis. This community-led governance model could become a blueprint for other projects facing similar challenges.
The SEC initially charged Terraform Labs and its co-founder Scepter in February 2023. The regulator accused them of misleading investors and violating federal securities laws through fraudulent activities involving the sale of unregistered securities.
Since March 2023, Scepter has been in a Montenegrin prison and faces extradition to the United States or South Korea. In addition, Scepter is banned from holding any public corporate positions and engaging in cryptocurrency transactions.

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