Terraform Labs, the bankrupt company behind the collapsed Terra blockchain project, is offloading four of its subsidiaries in a bid to fulfill its obligations following a hefty settlement with the US Securities and Exchange Commission (SEC).
The fire sale encompasses Pulsar Finance, a platform for tracking cryptocurrency portfolios; Station, a digital asset wallet; Enterprise, a tool facilitating the management of decentralized autonomous organizations (DAOs); and Warp, a protocol for automating smart contract execution. Notably, Terraform acquired Pulsar Finance just months before filing for Chapter 11 bankruptcy in January 2024.
This move aligns with the terms of Terraform’s $4.5 billion settlement with the SEC, which mandates the company’s wind-down. The settlement included nearly $3.6 billion in disgorgement, a civil penalty of $420 million, and prejudgment interest of around $467 million. Terraform’s co-founder and former CEO, Do Kwon, was also implicated, agreeing to pay a combined $194.3 million in disgorgement, civil penalties, and prejudgement interest. The settlement effectively bars both Kwon and Terraform from further involvement in the crypto industry.
The SEC’s lawsuit, filed in February 2023, accused Terraform and Kwon of fraud and violations of securities laws. The charges stemmed from the spectacular downfall of TerraUSD (UST), an algorithmic stablecoin designed to maintain a 1:1 peg with the US dollar. However, in May 2022, UST lost its peg, triggering a domino effect that sent the price of its interconnected cryptocurrency, Terra Luna Classic (LUNC), into a death spiral. Both LUNC and its successor, LUNA, have seen their values plummet by roughly 98% since their peaks in May 2022.
Terraform is inviting potential buyers for its subsidiaries to contact investment banker CAVU Securities. The sale of these assets represents an attempt to recoup some value for creditors and stakeholders while marking the final chapter for a company that once held significant sway in the cryptocurrency landscape.