In a significant development, Terraform Labs has received court approval to wind down its operations following a recent bankruptcy hearing. This decision comes in the wake of a settlement with the U.S. Securities and Exchange Commission (SEC) and has spurred positive market reactions, with LUNA and LUNC prices surging by over 8%.
Court Approval and Settlement Details
A U.S. Bankruptcy Judge, Brendan Shannon, has officially approved Terraform Labs’ plan to liquidate its assets. This move is seen as a “welcome alternative” to the prolonged legal battles the company has faced since the collapse of TerraUSD and LUNA in 2022, which resulted in around $40 billion in losses for investors. The court’s approval enables Terraform Labs to commence the liquidation process, with anticipated payouts to investors ranging from $184.5 million to $442.2 million.
Despite this approval, Terraform Labs has indicated that it is “impossible to estimate” the total eligible crypto losses that may be returned during liquidation. The company has agreed to settle the SEC lawsuit for approximately $4.47 billion, although the SEC is not expected to recover much from this settlement until investor claims are settled first.
Market Reaction: LUNC and LUNA Prices Surge
The announcement of Terraform Labs’ winding down operations has positively impacted market sentiment. As of this report, the price of Terra Luna Classic (LUNC) has risen over 8%, trading at $0.00008743 after reaching a 24-hour high of $0.00008829. Trading volume for LUNC also surged nearly 85%, hitting $26.17 million. Similarly, the price of LUNA increased by about 9% to $0.4033, with its trading volume jumping 42% to $47.12 million.
Data from CoinGlass reveals that LUNC and LUNA futures open interest soared by more than 28% and 27%, respectively, indicating growing confidence among investors.
Future Prospects and Developments
Analysts suggest that if LUNC can break through a crucial resistance level, it may target $0.000135 in the near future. This bullish outlook is further supported by positive developments within the Terra ecosystem, including the successful implementation of the v3.1.5 upgrade, which focuses on enhancing security and improving key features.
As Terraform Labs transitions into liquidation, the cryptocurrency community will be closely monitoring the situation, particularly the impact on investor payouts and the overall health of the Terra ecosystem moving forward.
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