Terra has announced significant developments following a bankruptcy court order in Terraform Labs’ (TFL) Chapter 11 case. The court has authorized TFL to take crucial steps, including reopening the Shuttle Bridge and destroying a substantial amount of LUNA tokens, marking a pivotal moment in the company’s restructuring efforts.
In a post on the X, the blockchain platform noted that as part of the court’s directives, TFL will reopen the Shuttle Bridge, allowing users to redeem sealed assets on Terra Classic.
Shuttle Bridge Reopening
The Shuttle Bridge, an essential infrastructure for transferring assets between Terra and other blockchains, had been 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 redemption process.
According to Terra, users will have a 30-day window to redeem their wrapped assets from the Bridge wallet. After this period, TFL intends to permanently close the Shuttle Bridge, and any remaining assets in the wallet will be destroyed.
Destruction of LUNA Tokens
In a move toward reducing the circulating supply of LUNA, the court order authorizes TFL to cancel the distribution and destroy 150 million LUNA tokens obtained from Terra community funding. 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 staked by 49 validators recommended by Terra. Once deactivated, these 125 million LUNA tokens, along with 2.5 million LUNA used for liquidity provision, will be destroyed.
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 late September 2024 at the earliest. This plan is part of TFL’s comprehensive strategy to emerge from bankruptcy and reposition Terra as a stable and reliable player in the cryptocurrency space.
The actions taken by TFL also follow a settlement reached between TFL and the US Securities and Exchange Commission (SEC). This settlement aims to address regulatory concerns and ensure compliance with federal securities laws, further contributing to the restructuring and stabilization efforts.