Terraform Labs’ Asset Is Only $75 Million, How Will It Pay $4.75 Billion to the SEC?
In a major announcement Wednesday, Terraform Labs announced they will pay approximately $4.5 billion to settle the SEC lawsuit. However, many in the crypto community have begun to raise doubts about how the bankrupt Terraform Labs, which had only $75 million in assets under management, planned to pay such a large fine.
Where will Terraform Laboratories bring in 4.5 Billion Dollars?
CryptoQuant founder Ki Young Ju recently questioned the source of such a large payment from Terraform Labs, equivalent to 64,824 Bitcoins. While expressing doubts about the transaction, he questioned whether this amount was actually used to restore the UST peg.
“Where does this money come from? Did they really use this to repair the nail? Hush,” Ki Young Ju stated on the As reported by parofix, Coinbase CLO Paul Grewal also expressed doubts about the SEC settlement.
On the other hand, Terraform Labs’ “known” wallet has only $75 million worth of assets. So the question remains as to where the additional $3.75 billion will come from.
Bankless co-founder and Ethereum participant David Hoffman said: “If Terraform Labs ACTUALLY has $4.5B in assets… and if that is ACTUALLY being paid in fines to the US SEC rather than the users who lose it… the agency corruption in our lives.” “It will be one of the craziest examples.”
What’s the Truth Behind the $4.5 Billion SEC Settlement?
Note that the current agreement with Terraform Labs involves a transfer to the bankrupt estate rather than any direct payment to the SEC. In addition to interest, the decision also includes compensation of $4.05 billion and a fine of $420 million.
Considering Terra‘s bankruptcy filing in January, it seems unlikely they’ll pay much of the total settlement amount. Instead, it will be treated as an unsecured debt in the Chapter 11 liquidation process.
Terra’s founder, Do Kwon, also agreed to a ban on crypto transactions and will transfer $204 million to Terraform’s bankruptcy estate.
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Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
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