TL;DR
- Terraform Labs, in the process of restructuring after bankruptcy, has received a court order to reopen the Shuttle Bridge and burn millions of LUNA tokens.
- The reopening of the Shuttle Bridge will allow users to redeem wrapped assets on Terra Classic for a period of 30 days; afterwards, the bridge will be permanently closed and any remaining assets will be destroyed.
- The proposed bankruptcy plan has not yet been approved and is expected to take effect by the end of September 2024.
Terraform Labs (TFL), creator of the failed stablecoin TerraUSD, continues to make progress in its restructuring process. The company, which filed for bankruptcy in January this year following the dramatic collapse of TerraUSD, has received a bankruptcy court order allowing it to proceed with its plan to exit Chapter 11. Among the authorized actions are the reopening of the Shuttle Bridge and the burning of millions of LUNA tokens.
TFL’s bankruptcy occurred nearly two years after TerraUSD lost 99% of its value in a short period of 48 hours, causing a crisis in the crypto industry. In its court filing, TFL committed to meeting all its monetary obligations to employees and vendors without the need for additional financing.
4/ Undelegating & burning LUNA
Also under the bankruptcy court order, and in compliance with the settlement reached between TFL and the SEC, TFL will begin the undelegation process of the 125M LUNA currently staked with the 49 validators selected by recommendation of the Terra…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) July 19, 2024
One of the key measures in the restructuring plan is the reopening of the Shuttle Bridge, which will allow users to redeem wrapped assets on Terra Classic. This reopening will be available for a period of 30 days once TFL’s bankruptcy plan becomes effective. After this period, the Shuttle Bridge will be permanently closed and any remaining assets will be destroyed.
Terraform Labs’ Plan Has Not Yet Been Approved
In addition to reopening the Shuttle Bridge, Terraform Labs will proceed with the burning of 150 million LUNA as part of the settlement reached with the U.S. Securities and Exchange Commission (SEC). This process will include the elimination of 125 million LUNA currently staked by 49 validators, as well as 25 million LUNA designated for liquidity provision.
The proposed plan by TFL has not yet received final approval from the bankruptcy court and is not expected to take effect until late September 2024 at the earliest. The implementation of these measures will be crucial in the company’s restructuring strategy as it deals with the fallout from its failed stablecoin.
Terraform Labs continues its effort to reorganize and regain stability while addressing regulatory requirements and seeking to provide a solution for the affected users in its ecosystem.
