Terraform Labs receives bankruptcy nod: A turning point?

LUNA

As a seasoned analyst with years of experience navigating the tumultuous waters of the crypto market, I must admit that the recent turn of events surrounding Terraform Labs and its ecosystem has left me both intrigued and somewhat amused. The U.S. court’s approval for Terraform to wind down its operations following the SEC settlement and bankruptcy proceedings is a significant milestone in the history of digital currencies, setting a precedent that could reverberate throughout the industry.

The company responsible for designing the Terra [LUNA] system, known as Terraform Labs, has been given approval by an American bankruptcy court to start the process of shutting down its business activities.

This significant court decision comes after the company’s recent agreement with the U.S. Securities and Exchange Commission (SEC) regarding accusations of fraud connected to the disastrous fall of its TerraUSD stablecoin and LUNA token. Together, these financial products wiped out approximately $40 billion in value during 2022.

At a significant court hearing for Chapter 11 bankruptcy reconstruction on September 19th, Judge Brendan Shannon approved Terraform’s proposal, stating that it was the more suitable option to resolve ongoing disagreements about investor losses, as opposed to prolonged legal battles.

What are the reports suggesting?

According to the recent update from Reuters, Judge Shannon has endorsed Terraform’s bankruptcy proposal during a court session in Wilmington, Delaware, describing it as a “desirable option” instead of prolonging legal disputes concerning investor losses.

In a legal resolution, Terraform Labs – previously filing for bankruptcy in the current year – has agreed to pay an amount of $4.47 billion to the U.S. Securities and Exchange Commission (SEC), following a court verdict that found the company guilty of misleading investors.

Yet, it’s important to note that the Securities and Exchange Commission (SEC) won’t receive any funds from this settlement until Terraform Labs has met its commitment to reimburse affected investors for their cryptocurrency losses.

Based on the recent announcement, the company is unable to provide an exact figure for the total amount of these potential losses at this time.

Remarking on the same, Reuters said,

As a researcher, I’d rephrase that statement as follows: “During the bankruptcy liquidation process, Terraform is projected to distribute between $184.5 million and $442.2 million to crypto holders and other involved parties, including myself if applicable.

Impact on Terra Luna Classic and Tera Luna’s price

Regardless of the latest advancements, the value of Terra Luna Classic [LUNC] didn’t exhibit an immediate downward trend at first.

Currently, Terra Luna Classic is being exchanged for approximately 0.00008717 USD, marking a 2.22% rise over the last day.

Currently, the value of Terra Luna [LUNA] dropped slightly by 0.16%, and it’s now being traded at approximately $0.3924, based on information from CoinMarketCap.

Following the verdict by the U.S. court, Terra Luna Classic experienced an increase of approximately 8% and reached $0.00008743. At its highest point within a 24-hour span, it peaked at $0.00008829.

The trading volume for Terra Luna Classic also spiked nearly 85%, hitting $26.17 million.

Likewise, LUNA experienced an approximately 9% price hike, reaching $0.4033, and a significant 42% surge in trading activity, with volumes amounting to around $47.12 million.

2024-09-21 02:15

What are the reports suggesting?

Impact on Terra Luna Classic and Tera Luna’s price

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