In response to an impending court order stemming from its legal skirmish with the US Securities and Exchange Commission (SEC), blockchain company Terraform Labs has announced plans to limit access to certain products and services for US-based users.
The decision, revealed in a recent tweet on X, underscores Terraform Labs’ proactive stance as it navigates through legal challenges. The company disclosed that it will adjust active liquidity provisioning and access to Terraform Labs (TFL) products in select jurisdictions, with a particular focus on the US market.
This move comes in the wake of enforcement actions initiated by the SEC against Terraform Labs and its founder, Do Kwon. The regulatory body has petitioned a New York court to impose fines totaling $5.3 billion, attributing the firm’s activities to the $40 billion collapse of the Terra ecosystem in 2022, involving LUNA-UST sister tokens and UST depegging.
Anticipating a potential “conduct injunction” from the court, Terraform Labs is proactively preparing for restrictions by limiting access to certain features and products for US-based users, effective next week.
Despite its reluctance towards geoblocking, Terraform Labs expressed that it finds itself compelled to take such measures given the prevailing circumstances. However, the company assured that open-source projects like the Terra blockchain and Alliance will remain unaffected by these developments.
Terraform Labs’ decision to restrict access for US-based users underscores the complexities of operating within a regulatory environment, as blockchain firms strive to find a delicate balance between compliance and innovation amidst legal challenges.
