Terraform Labs has received court approval to wind down its operations as part of its bankruptcy plan, following a settlement with the U.S. Securities and Exchange Commission (SEC) over allegations of defrauding investors during the collapse of its Terra ecosystem. U.S. Bankruptcy Judge Brendan Shannon described the plan as a 'welcome alternative' to prolonged litigation regarding investor losses, which are estimated to be around $40 billion. The bankruptcy proceedings, initiated in January, could allow Terraform to pay between $184.5 million and $442.2 million to affected stakeholders, although the total losses remain 'impossible to estimate'. Terraform has also settled with the SEC for approximately $4.47 billion, but payment will only occur after satisfying claims from crypto loss victims. The company's founder, Do Kwon, faces additional criminal charges while currently in detention in Montenegro. The approval has sparked positive market sentiment, with LUNA and LUNC prices experiencing notable rallies.