In a key development for the cryptocurrency industry, Terraform Labs has received court approval to wind down its operations, sparking renewed market interest in LUNA and Terra Luna Classic (LUNC). A U.S. bankruptcy judge has greenlit the firm’s plan to liquidate its assets, a move that comes after a settlement with the U.S. Securities and Exchange Commission (SEC). The news appears to have boosted market sentiment, with LUNA and LUNC prices rallying in the wake of the announcement.
Court Approval Marks a Turning Point for Terraform Labs
Judge Brendan Shannon, overseeing the bankruptcy proceedings, approved Terraform Labs’ plan to close its operations and liquidate its remaining assets. This approval follows a settlement between Terraform Labs and the SEC, which previously accused the company and its founder, Do Kwon, of defrauding investors after the collapse of TerraUSD (UST) and LUNA in 2022. The collapse resulted in approximately $40 billion in losses for investors, marking one of the most significant events in crypto history.
The settlement with the SEC was reached for a staggering $4.47 billion, although the regulator will only collect after investors and stakeholders have been compensated through the liquidation process. Judge Shannon called this approval a “welcome alternative” to the prolonged legal battle, stating that the plan will allow the company to focus on paying back creditors.
Estimated Payouts and Investor Sentiment
Under the liquidation plan, investors and other stakeholders could receive payouts estimated between $184.5 million and $442.2 million. However, Terraform Labs has stated that the exact amount of crypto losses eligible for compensation remains uncertain, citing the difficulty in calculating total losses.
Despite the financial uncertainty, this settlement has been viewed positively by the market, with many investors expressing optimism about potential returns. The SEC’s decision to prioritize compensation for crypto losses before collecting its settlement highlights the agency’s recognition of the financial damage suffered by investors.
LUNA and LUNC Prices Surge
The market responded positively to the court’s decision, as both LUNA and LUNC saw significant price increases. At the time of writing, Terra Luna Classic (LUNC) was trading at $0.00008743, up over 8% from its previous price. LUNC also reached a 24-hour high of $0.00008829, with its trading volume surging by nearly 85% to $26.17 million. Similarly, LUNA’s price rose by approximately 9% to $0.4033, with a trading volume increase of 42%, reaching $47.12 million.
According to CoinGlass data, futures open interest for both LUNA and LUNC jumped by more than 27% and 28%, respectively. This suggests growing confidence among market participants as they anticipate further price movements in the wake of Terraform Labs’ liquidation.
What’s Next for Terraform Labs and Its Investors?
With the liquidation process set to begin, the focus now shifts to how much of the remaining assets will be returned to investors and other stakeholders. While the company’s settlement with the SEC is a step in the right direction, the final payout amounts are still up in the air. As a result, investors are cautiously optimistic about the potential recovery of their losses.
The liquidation approval has also brought revived attention to LUNA and LUNC, as traders seek to capitalize on the increased volatility and trading volume. Both assets are experiencing heightened interest, as indicated by the jump in futures open interest. Whether this rally will persist remains to be seen, but for now, the market is riding a wave of optimism following the latest developments.
Conclusion
Terraform Labs’ court-approved liquidation marks a significant milestone in the aftermath of the TerraUSD and LUNA collapse. While investors remain unsure about the total recovery of their losses, the approval and settlement with the SEC have intrigued positive sentiment in the market. Both LUNA and LUNC have rallied in response, reflecting growing market confidence as Terraform Labs prepares to close its doors for good.
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