A bankruptcy court has ordered Terraform Labs (TFL) to reactivate the Terra Classic (LUNC) Shuttle Bridge and to undelegate and burn 150 million LUNA tokens.
The Terra Classic X account disclosed this in a recent announcement, stressing that this came as an order in the Terraform Labs’ ongoing Chapter 11 bankruptcy case.
1/ We'd like to inform you about a recent bankruptcy court order in TFL’s chapter 11 case authorizing TFL to do the following: 1) Reopen the Shuttle bridge for the redemption of wrapped assets on Terra Classic; 2) Undelegate & burn the 150M LUNA from the Terra Community Grant ⬇️
— Terra Classic (@terrac_money) July 19, 2024
An official filing reveals that the court has ordered the company to reopen the Terra Classic Shuttle bridge and burn 150 million LUNA tokens as part of the settlement process with the U.S. SEC.
For context, TFL and its co-founder, Do Kwon, settled with the SEC for $4.47 billion in May. The SEC’s official accusation was that TFL defrauded investors, leading to $40 billion in losses when TerraUSD and LUNA collapsed in May 2022.
Details of the Court Order
The court’s latest ruling requires TFL to reopen the Shuttle bridge, facilitating the redemption of wrapped assets on Terra Classic. TFL will move all assets from the Shuttle Bridge wallets to new, secure wallets.
Additionally, they will implement a streamlined interface for the Shuttle bridge, allowing users to redeem wrapped assets for 30 days once the Chapter 11 plan takes effect. After this period, TFL will burn any leftover assets and close the Shuttle Bridge.
Under the court’s directive, TFL must also undelegate and burn LUNA tokens. They will start by undelegating 125 million LUNA previously staked with up to 49 validators and burning these tokens. In addition, 25 million LUNA designated for liquidity provisioning will also be incinerated.
Bankruptcy Filing and Current Status
Recall that in January 2024, TFL sought Chapter 11 bankruptcy protection, reporting assets and liabilities between $100 million and $500 million. This filing occurred nearly two years after the Terra ecosystem collapse in May 2022, which resulted in losses exceeding $40 billion.
The bankruptcy filing enabled TFL to continue operating while restructuring its debts and addressing ongoing legal issues in the U.S. and Singapore. The court has recently set a deadline of August 9, 2024, for creditors to submit their claims.
Following the latest disclosure, the Terra Classic X account emphasized that no immediate action is required from users at this time. They assured that further instructions for previous Shuttle bridge users will be announced on the X accounts: @terrac_money and @terra_money.
TFL intends to sell various business units, such as Pulsar Finance and Station, to optimize value for creditors. CEO Chris Amani is optimistic about the company’s future and has expressed dedication to meeting financial commitments to employees and suppliers during the bankruptcy process.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
