Terraform Labs Warns of Shutdown of Product, Services

If talks with a third party don’t work out, Terraform Labs plans to shut down important products and services by October 30, 2024.

Terraform Labs has disclosed that it may discontinue numerous products and services by October 30, 2024. The company is currently negotiating with third parties to transfer control of these operations; however, if no agreements are reached, the shutdown will proceed.

Enterprise, Station, Warp, and Alliance Hub are the products that this decision may impact. In addition, services such as Finder Block Explorer, Foundation, IBC Relayers, Mantlemint, FCD, and API services are also at risk. This decision is consistent with the company’s intention to withdraw from direct involvement in the Terra ecosystem, a strategy that has been in progress since their bankruptcy filing.

Legal Background and Bankruptcy Proceedings

A US Bankruptcy Judge approved the company’s plan to cease operations in September 2024. The judge characterized the plan as a superior alternative to protracted litigation. Following the collapse of its TerraUSD stablecoin and Luna in May 2022, Terraform Labs filed for bankruptcy in January 2023. The event resulted in approximately $40 billion in investor losses.

Do Kwon, the organization’s founder, was accused of financial fraud. The US Securities and Exchange Commission (SEC) has settled with Terraform Labs of $4.5 billion. Nevertheless, it is improbable that the SEC can collect the entire sum, as the settlement will be disbursed after Terraform resolves the crypto loss claims arising from its bankruptcy proceedings.

Shuttle bridge opens on a limited basis

Terraform Labs also reopened the Shuttle Bridge interface. The bridge allows users to transfer wrapped versions of Luna Classic and TerraUSD Classic between the Terra blockchain and other blockchains, including Ethereum, BNB Chain, and Harmony. It will remain operational until October 30, 2024, and represents the final opportunity for users to redeem their assets. The contracts’ remaining assets will be destroyed following their closure.

This is crucial for Terra Classic users, as it may be their final chance to retrieve wrapped assets before the service’s termination. The reopening of Shuttle Bridge is also a component of a broader initiative by Terraform Labs to transition from direct involvement in the Terra ecosystem.

Upgrade to the Final Chain

Terraform Labs has disclosed that Proposal 4818 will serve as its final blockchain upgrade. The company will cease to provide support for future upgrades or maintenance once it ceases to function. Instead, the Terra community will assume control through initiatives like the Phoenix Directive. This signifies a transition from Terraform-led development to a community-driven initiative to maintain and evolve the blockchain infrastructure.

The closure of Terraform Labs establishes a significant precedent for managing bankruptcies in the cryptocurrency sector, which is expected to impact future bankruptcy proceedings significantly.