Terraform Labs Announces to Cease Operations After $4.5 Billion SEC Settlement

Terraform Labs Announces to Cease Operations After $4.5 Billion SEC Settlement

Terraform Labs is planning to sell important projects based on the Terra network. Once the sales are concluded, the firm will hand over control of the Terra blockchain to the local community.

The platform has recently signed an agreement with the Securities and Exchange Commission of the United States. On this account, the network stands to pay around $4.5 billion in settlement charges.

Fall of Terraform Labs

A jury came up with the verdict of Terraform Labs founder and co-founder responsible for the collapse of the blockchain network. This incident generated a domino effect that resulted in creating a $40 billion loss among investors.

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Chris Amani, the CEO of Terraform Labs, recently claimed that the organization will halt operations effective after the settlement. The firm is now working on organizing a sale of its key systems and shifts the control to the community.

Another lawsuit has revealed that blockchain payments firm Ripple Labs has filed a petition in court to come up with a civil penalty. The petition was made in the midst of Terraform Labs and SEC lawsuit.

On the other hand, the SEC has been asked to Ripple to pay $2 billion in disgorgement, civil penalties, and prejudgment interest. Ripple has countered by retaining that the fine should be within $10 million.

Ripple Labs Lawsuit Takes a New Turn

SEC officials have disregarded the reasons presented by Ripple Lawyers to keep the penalty charges within $10 million. Ripple has used the example from Terraform Labs lawsuit noting that the project was granted $420 million in civil penalties that accounted for 1.27% of their $33 billion gross profits.

However, the SEC has responded by claiming that the comparison was inappropriate due to the different natures of both lawsuits.

SEC officials explained that the Terraform penalty was proportionate to violative conduct which was calculated to be around 12%. Meanwhile, if the same ratio was applied to $876.3 million of Ripple Labs’ gross profits, it would represent a lower penalty that does not complete the legal threshold set under civil penalty laws.

The Ripple Labs faced off against SEC officials in a long drawn-out legal battle in the matter of XRP as unregistered security. However, a judge finally granted partial victory to the project noting that XRP sales taking place on secondary exchanges do not qualify as security sales.

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Following the victory, XRP was relisted on a number of major trading platforms. However, the ongoing lawsuit is going to decide the direction for XRP going forward.

DeFi Sector to Face Regulatory Pressure from SEC

From the DeFi sector, Uniswap is also fighting a lawsuit against the SEC. As per a Forbes report, Uniswap much like other DeFi exchanges has continued to amass massive funding despite the restrictions from the SEC. The TVL in Uniswap currently stands at $50 billion. However, the project recently received a Wells Notice from the SEC pointing toward the possibility of a lawsuit.

Uniswap Labs management has retained that it is only a software solutions provider and Uniswap protocol with an autonomous code is intended for public utility.

DeFi sector that does not harbor the same support as its centralized counterpart is expected to face a little turbulence however Wells notices does not always translate into a lawsuit.

An article published in DLNews indicated that a DeFi Education Fund has filed a lawsuit against the SEC at the Federal court of Texas on the matter of crypto airdrops. The firm is operating under the supervision of CLO Amanda Tuminelli. Speaking with media the executive added that the platform was poking the bear but putting its name on the front label.

The firm deals in bags and wallets produced in Kenya but also takes an interest in cryptocurrencies. The firm has released a number of NFTs and hosted a token airdrop token for investors who were accessing different types of crypto-related services. The firm is taking the initiative to sue the agency citing concerns that the SEC might undertake enforcement action against its native token.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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