SEC announces Terraform investment/creditor compensation announcement! LUNA victims also receive compensation

This site (120BtC.coM): In mid-2022, public chain Terra’s LUNA and UST exploded, causing global investors to suffer an economic loss of US$40 billion. Terraform Labs, the developer behind Terra, and its founder Do Kwon officially reached a settlement with the U.S. Securities and Exchange Commission (SEC) in their civil lawsuit in mid-June.

Terraform Labs and Do Kwon agreed to pay fines of US$4.47 billion and US$200 million respectively in exchange for settlement with the SEC. However, the issue that investors who suffered losses in the Terraform thunderstorm are most concerned about: when exactly they can receive compensation has not yet been determined. Get answers.

How do Terra disaster victims receive compensation?

In response, the SEC issued an announcement on the 26th to respond to questions about how to obtain compensation for investors and creditors who were harmed by Terraform Labs. The SEC pointed out that as investors continue to ask the agency whether they can obtain compensation, the SEC has compiled relevant information to help answer these questions, saying that compensation will mainly need to be processed through the pending "Terraform Labs bankruptcy case."

Terraform Labs applied for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court of Delaware in January this year, with estimated assets and liabilities ranging from US$100 million to US$500 million, and the number of creditors ranging from 100 to 199.

SEC: Creditors and investors will not collect more than US$4 billion in penalties before receiving compensation

SEC explained that Terraform Labs will seek approval of a Chapter 11 liquidation plan in its bankruptcy case, which will establish a liquidation trust or Property Representative came to liquidate Terraform’s remaining assets and pay compensation to Terraform’s creditors and investors who were harmed by Terraform’s “encrypted asset securities” (referring to LUNA and other tokens issued by the company).

The court’s final judgment ruled that Terraform owed $4.47 billion in disgorgement, prejudgment interest and civil penalties. Do Kwon must transfer at least $204 million to Terraform's bankruptcy estate for distribution to investors whose funds have been damaged, including $7 million in cash and all crypto assets of Luna Foundation Guard.

SEC emphasized: "The SEC will not receive any payment until investors and creditors receive full compensation in the bankruptcy case."

Terraform bankruptcy plan is expected to be released in the fall

SEC added that the bankruptcy liquidation submitted in the bankruptcy case of Terraform Labs The plan will provide for the recovery rights of all creditors and injured investors. Creditors and injured investors will have the opportunity to review Terraform's disclosure statement and liquidation plan and vote for or against the plan.

The liquidation plan hearing and effective date are currently expected to fall in the fall of 2024. The bankruptcy court has not yet determined procedures and deadlines for how creditors and injured investors can submit claims for losses related to the Terraform fraud, but will post information to the relevant website once the plan is approved.

LUNA has fallen by more than 70% from its high this year

In terms of currency price, LUNA once reached US$0.83 at the end of May. It has continued to fall in the past two months. At the time of writing, it is trading at US$0.385, which is down from this year’s high of US$1.26. Go to nearly 70%.

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