Terraform Labs Blocks US Access, Pulls Liquidity After SEC Ruling

Following a recent SEC ruling, Terraform Labs (TFL) announced operational changes on April 25. TFL will soon receive a conduct injunction barring US activities, leading to restricted access to products and features for US users starting April 28. The injunction also requires TFL to withdraw $23.8 million in liquidity from Astroport, Ura, and White Whale. TFL expressed frustration but emphasized its commitment to adapting.

Terraform Labs Restricts US Access, Withdraws Liquidity Amid SEC Ruling

New York, NY - April 25, 2023 - Terraform Labs (TFL), the company behind the collapsed Terra ecosystem, has announced significant changes to its operations following a recent court ruling in the ongoing Securities and Exchange Commission (SEC) case against the company.

In a statement released today, TFL acknowledged that it anticipates receiving a conduct injunction from the court, which will prohibit it from engaging in certain activities within the United States. The company emphasized that it is acting proactively to comply with the expected injunction by barring US users from accessing specific products and features starting in the week of April 28th.

TFL expressed its dissatisfaction with this development, stating that it "stands against geoblocking as a matter of principle." However, the company acknowledged that it has no choice but to adapt to the legal requirements.

The policy change will not affect all of TFL's projects. Notably, Alliance, an open-source Cosmos SDK module, and the Terra blockchain itself will remain accessible to users in the US.

In addition to the access restrictions, TFL is also required to withdraw liquidity from various trading platforms due to the injunction. The company announced that it will begin withdrawing a total of $23.8 million worth of liquidity from three platforms - Astroport, Ura, and White Whale - starting on April 26th. Each of these positions is a LUNA pair.

TFL stated that the withdrawn LUNA tokens will be stored in a multisig account throughout the ongoing bankruptcy proceedings.

The SEC filed charges against TFL in February 2023, alleging that the company and its former CEO, Do Kwon, defrauded investors through the sale of Terra's algorithmic stablecoin, TerraUSD (UST). A jury found Terra and Kwon liable for fraud in early April.

On April 19th, the SEC requested a series of injunctions against the defendants, including restrictions on their ability to purchase, offer, or sell crypto asset securities. The SEC also sought to prohibit them from inducing other parties into such transactions. Additionally, the agency requested monetary fines and penalties totaling $5.3 billion.

Despite its bankruptcy and the collapse of UST in May 2022, Terraform Labs continues to operate and offer certain products and services. However, the SEC ruling and the resulting restrictions imposed on the company are likely to have a significant impact on its future operations.

Investors and the cryptocurrency community are closely monitoring the situation as the legal proceedings against TFL and Kwon continue to unfold. The outcome of these proceedings will have implications for the broader cryptocurrency industry and the future of Terraform Labs.