Terraform Labs Restricts US Access, Withdraws 23 Million Dollars Liquidity After SEC Ruling

Crypto News– Terraform Labs (TFL) announced operational adjustments on April 25 following a recent court ruling associated with the SEC’s case against the company.

Terraform Labs Restricts US Access, Withdraws 23 Million Dollars Liquidity After SEC Ruling

1/ Attention Terra community:

Due to the recent court ruling, TFL is making changes to its operations moving forward, including active liquidity provisioning and access to TFL products in certain jurisdictions.

🧵 👇

— Terra 🌍 Powered by LUNA 🌕 (@terra_money) April 25, 2024

TFL anticipates receiving a conduct injunction soon, restricting certain activities in the US. Consequently, the company plans to restrict access for US users to certain products and features starting the week of April 28. Despite describing the situation as frustrating and expressing a principle against geoblocking, TFL stated it has no alternative but to comply with the injunction. Notably, some projects such as Alliance, an open-source Cosmos SDK module, and the Terra blockchain itself will remain unaffected by the policy change.

Closures in Liquidity: Terraform Labs Responds to SEC Ruling

In response to the injunction, Terraform Labs (TFL) has announced plans to withdraw liquidity from positions across multiple platforms. The company will initiate the withdrawal of $23.8 million in liquidity from Astroport, Ura, and White Whale platforms on April 26. Notably, each position represents a LUNA pair. Terraform Labs stated that the withdrawn LUNA tokens will be stored in a multisig account during the bankruptcy proceedings.

Injunctions Sought by SEC: Response from Terraform Labs

After a jury found Terraform Labs and its former CEO, Do Kwon, liable for fraud in early April, the SEC filed charges against the company in February 2023. The SEC recently requested various injunctions against the defendants on April 19.

These injunctions include restrictions on their ability to purchase, offer, and sell crypto asset securities, such as LUNA, and bar them from inducing others into such transactions. Additionally, the SEC has requested monetary fines and penalties totaling $5.3 billion.

Despite facing bankruptcy and the collapse of its stablecoin, TerraUSD, which depegged from the dollar in May 2022, Terraform Labs continues to operate and offer certain products.