Terraform Labs to Restrict US User Access Amidst SEC Legal Battle


Terraform Labs (LUNA), the company behind the Terra blockchain ecosystem, announced plans to restrict access to its products and services for users based in the United States. This move comes in anticipation of a potential “conduct injunction” from the US Securities and Exchange Commission (SEC) following their ongoing legal battle.

Compliance First: Blocking US Users

While details regarding the specific features and products affected remain unclear, Terraform Labs emphasized that this decision aligns with their compliance efforts. The company anticipates a court order from the SEC that could restrict them from certain activities within the US market.

“As a result of the SEC case, TFL may receive a conduct injunction, which could prohibit TFL from engaging in certain activities,” Terraform Labs stated in their announcement. “To prepare for this, TFL will be restricting access to some TFL products and features from users in the United States as of next week.”

While acknowledging that this approach goes against typical principles of geoblocking (restricting access based on geographic location), Terraform Labs maintains it’s a necessary step given the current circumstances.

SEC Lawsuit and Hefty Penalties

The SEC filed a lawsuit against Terraform Labs and its founder, Do Kwon, in 2023. The lawsuit alleges the company’s involvement in the Terra ecosystem collapse in 2022 and seeks a hefty $5.3 billion penalty.

This legal battle, coupled with the potential conduct injunction, has significantly impacted Terraform Labs’ operational capabilities.

Impact on LUNA Price and Ecosystem

While the user access restrictions won’t affect projects like Alliance and the broader Luna ecosystem, the overall market sentiment and the ongoing legal developments will likely continue to shape the price trajectory of LUNA.

LUNA 1D Chart on Coinmarketcap

At the time of writing, LUNA has experienced a slight uptick, rising 2.08% in the last day and 1.45% over the past week. However, its future price movement will depend heavily on how the SEC case unfolds and how the broader cryptocurrency market performs.

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