Terraform Labs set to restrict access for users in the US after recent ruling in SEC lawsuit

Blockchain company Terraform Labs said Thursday that it will restrict access to some of its products and services for US-based users as it expects to receive a court order soon in light of its legal battle against the US Securities and Exchange Commission (SEC).

Terraform Labs to restrict access for US-based users

Terraform Labs is making changes to its operation, according to a recent announcement in a tweet on X. The firm said that it will change active liquidity provisioning and access to Terraform Labs (TFL) products in certain jurisdictions. 

The SEC brought enforcement actions against Terraform Labs and founder Do Kwon, asking a New York court to impose $5.3 billion in fines for the firm’s role in the $40 billion implosion of the Terra ecosystem, (LUNA-UST sister tokens and UST depegging) in 2022.

TFL said it may receive a “conduct injunction,” meaning the court could order the firm to cease some of its activities. Terraform Labs is preparing for this by restricting access to some of its product and features for US-based users next week. 

TFL said that it is against geoblocking but it has no choice given the circumstances. Open source projects such as the Terra blockchain and Alliance will not be affected by the developments, the company said. 

The firm will also withdraw liquidity from its positions, starting April 26, as required by the court ruling. 

The LUNA withdrawn from these positions will be held in a multisig wallet during the bankruptcy proceedings. 

LUNA is exchanging hands at $0.6345 at the time of writing, down 2.25% this week.