SEC Takes Action on Terra Collapse: $4.47 Billion Compensation Plan Unveiled

• The U.S. Securities and Exchange Commission (SEC) has undertaken new initiatives as a response to the Terra collapse, which had a substantial impact on the crypto markets in mid-2022.
• This catastrophic event not only resulted in a loss of over $40 billion but also led to the downfall of significant firms such as FTX and 3AC.
• The SEC’s involvement aims to aid those affected and provide a structured route towards compensation.

Explore the latest SEC initiatives addressing the Terra crash, investor compensations, and steps for affected individuals.

SEC’s New Initiatives to Support Terra Crash Victims

The SEC has launched a dedicated information page designed to assist the victims of the Terra collapse. By 2024, those affected by this incident, along with victims of other historical crashes such as Mt Gox, may begin to receive compensation. While the timeline for refunds from FTX remains ambiguous, the plan for Terra is more defined, with detailed strategies laid out for restitution.

How Will Terraform Handle Compensations?

Terraform has accrued liabilities amounting to $4.47 billion in penalties and compensations. These funds are to be handled through Terraform’s bankruptcy proceedings. The Final Judgment requires Do Kwon to contribute $204 million, consisting of $7 million in cash and various cryptocurrency assets, to the bankruptcy estate to be distributed to the impacted investors.

Steps for Affected Investors to Gain Compensation

Investors who suffered losses need to file proof of claim forms to participate in the voting on Terraform’s Chapter 11 bankruptcy plan, which will be submitted for approval. The hearing for this approval is slated for fall 2024. Further information and documentation can be accessed on the SEC’s dedicated page, and investors are able to reach out to the SEC directly via email for further assistance.

Concrete Measures for Investors

Investors should take the following steps for the compensation process:

• Visit the SEC’s Terra information page for comprehensive guidelines.
• Submit proof of claim forms to be involved in the bankruptcy plan voting process.
• Reach out to the SEC through email for specific queries or assistance.
• Stay updated on the approval hearing scheduled for fall 2024.
• Discuss potential compensation plans with a financial advisor.

The Official Committee of Unsecured Creditors will monitor the process, overseen by McDermott Will & Emery LLP, managing Terraform’s bankruptcy case. Although the compensation process for the FTX case faces delays, Terra’s refunds may align if the proceedings move forward efficiently. Complete compensation might not be achievable, but the SEC’s initiatives provide a roadmap for recovery.

Conclusion

In summary, the SEC’s proactive steps in addressing the Terra collapse provide much-needed clarity and hope for affected investors. The outlined measures for compensation, structured processes, and the potential for recovery underscore a significant move towards rectifying the fallout from one of the largest financial disruptions in the crypto market. Investors should stay informed and take necessary actions to ensure they are part of the restitution process.