Terraform Labs to restrict US access, withdraw $23 million of liquidity following SEC ruling
Terraform Labs (TFL) announced changes to its operations on April 25 in light of a recent court ruling related to the SEC’s case against the company.
TFL said it expects to receive a conduct injunction soon that will bar it from certain activities in the US. The company added that it will prepare for the injunction by barring US users from accessing some products and features starting in the week of April 28.
TFL called the development “frustrating” and said it is “against geoblocking as a matter of principle” but has no choice but to adapt.
The policy change will not affect some projects, including Alliance, an open-source Cosmos SDK module, and the Terra blockchain itself.
Liquidity closures
TFL must also withdraw liquidity from positions on various platforms due to the injunction
The company said it will start withdrawing liquidity worth $23.8 million across three platforms — Astroport, Ura, and White Whale — on April 26. Each position is a LUNA pair.
Terraform Labs said it would store the withdrawn LUNA tokens in a multisig account through the bankruptcy proceedings.
SEC requested injunctions
The SEC filed charges against Terraform Labs in February 2023. The trial began this March, and a jury found Terra and its former CEO, Do Kwon, liable for fraud in early April.
The SEC requested various injunctions against the defendants on April 19.
Specifically, the SEC asked for restrictions on each party’s ability to purchase, offer, and sell crypto asset securities — including but not limited to LUNA. The SEC also said the defendants should be barred from inducing other parties into such transactions.
The SEC also requested monetary fines and penalties totaling $5.3 billion
Terraform continues to operate and offer certain products despite its bankruptcy and the collapse of its stablecoin, TerraUSD, which depegged from the dollar in May 2022.
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