Terra announced important developments following the bankruptcy court's order in Terraform Labs' (TFL) Chapter 11 case. The court allowed TFL to take important steps, including reopening the Shuttle Bridge and destroying a large amount of LUNA Token , marking a pivotal moment in the company's restructuring efforts.
In a post on X, the blockchain platform noted that following the court directive, TFL will reopen the Shuttle Bridge, allowing users to redeem sealed assets on Terra Classic.
Shuttle Bridge reopens
Shuttle Bridge, an essential infrastructure for transferring assets between Terra and other blockchains, was previously closed. TFL plans to transfer all assets held in the Shuttle Bridge wallet to a new wallet and introduce a simplified interface to facilitate the exchange process.
According to Terra, users will have 30 days to redeem their wrapped assets from the Bridge wallet. After this deadline, TFL intends to permanently close the Shuttle Bridge and any remaining assets in the wallet will be destroyed.
Destroy LUNA Token
In a move towards reducing the circulating supply of LUNA, the court order has authorized TFL to cancel the distribution and destroy 150 million LUNA Token obtained from Terra crowdfunding. This destruction is part of a broader strategy to stabilize the value of LUNA and restore confidence among the community and investors.
Additionally, TFL will begin the process of deactivating the 125 million LUNA currently held by 49 validators proposed by Terra . Upon deactivation, these 125 million LUNA Token , along with the 2.5 million LUNA used for liquidation provision, will be discarded.
Future plans
TFL's proposed Chapter 11 plan, which includes these measures, has not yet received full approval from the bankruptcy court and is not expected to take effect until the end of September 2024. This is part of TFL's comprehensive strategy to emerge from bankruptcy and reposition Terra as a stable and trustworthy company in the cryptocurrency space.
The actions taken by TFL also follow an agreement reached between TFL and the U.S. Securities and Exchange Commission. The agreement is intended to address regulatory concerns and ensure compliance with federal securities laws, further contributing to restructuring and stabilization efforts.
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