Bankrupt cryptocurrency firm Terraform Labs announced on July 9 that it is exploring options to sell four of its businesses as part of a $4.5 billion settlement with the United States Securities and Exchange Commission (SEC). The firm is winding down its operations and looking to maximize value for its creditors and stakeholders.
Terraform plans to sell its portfolio tracking platform Pulsar Finance, crypto wallet platform Station, no-code decentralized autonomous organization (DAO) management platform Enterprise, and smart contract automation protocol Warp. The sale of these assets is a key component of Terraform’s broader strategy to comply with the terms of its settlement with the SEC.
Terraform acquired Pulsar Finance in November 2023, just months before filing for Chapter 11 bankruptcy in Delaware in January. Enterprise was launched a year earlier in November 2022. The company has continued to actively develop Warp and Station, with their latest updates released in February and March of this year, respectively.
The $4.5 billion settlement with the SEC includes nearly $3.6 billion in disgorgement, a $420 million civil penalty, and approximately $467 million in prejudgment interest. Additionally, Terraform’s co-founder and former CEO Do Kwon agreed to pay $110 million in disgorgement, $14.3 million in prejudgment interest, and an $80 million civil penalty. Both Kwon and Terraform are effectively banned from the cryptocurrency industry, concluding the SEC’s February 2023 lawsuit that charged them with securities law violations and fraud.
Terraform Labs was the creator of Terra Luna Classic (LUNC) and the US dollar algorithmic stablecoin TerraUSD (UST), now known as TerraClassicUSD (USTC). The interconnected design of these cryptocurrencies led to a catastrophic depeg in May 2022, causing an unstoppable death spiral in their prices. Both LUNC and USTC are now essentially worthless.
The price of Terraform’s current token, Terra, remained unaffected by the news and is down 3% for the week, trading at $0.37. The token has seen a steep decline of 98% since its peak of $18.87 in May 2022, according to CoinGecko data.
Terraform has invited interested parties to contact its investment banker, CAVU Securities, for potential purchases of its businesses as it seeks to fulfill its obligations under the SEC settlement and wind down its operations.
