Terraform Labs to Restrict Access for US Users Amid SEC Legal Battle

Terraform Labs announced plans to limit access to its products for US-based users. This decision comes as the blockchain company anticipates a court order in its ongoing legal tussle with the US Securities and Exchange Commission (SEC).

The expected court order could significantly impact Terraform Labs' operations in the US. There have already been indications that the firm will alter active liquidity provisioning and access to its products in the US. 

Although the exact features affected remain unclear, the move signals a strategic pullback in response to regulatory pressures.

SEC's Legal Actions and Injunctions

Recently, the SEC has ramped up its actions against Terraform Labs and its CEO, Do Kwon, issuing injunctions following a court ruling. 

The SEC has requested significant restrictions on Terraform Labs and Kwon’s future dealings in crypto assets. These include prohibitions on purchasing, offering, and selling crypto asset securities, such as LUNA. Moreover, the SEC seeks to prevent them from inducing others into similar transactions.

Earlier this year, Terraform Labs and Do Kwon faced serious allegations, resulting in a fraud conviction. The trial, which began in March 2023, concluded with hefty penalties imposed on both the company and Kwon. The SEC's penalties total $5.3 billion, comprising a $4.2 billion disgorgement fee and additional civil penalties—ranking among the highest in the history of cryptocurrency regulations.

Financial Reorganization at Terraform Labs

Terraform Labs plans to withdraw $23.8 million in liquidity from various platforms, including Astroport, Ura, and White Whale, on April 26. This withdrawal involves several LUNA pairs and is part of a broader effort to restructure the company’s financial strategy post-SEC ruling.