Retrieve and Deposit at Least $1,500,000 From Off-Chain Sources Into a Terra Luna Classic Recovery Fund via an Authorized Legal Entity, for the Benefit of the TC Community & Token Holders

Proposals
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1. Simplified Overview

The following is a quick and simple overview of this proposal:

  • The proposal co-signers (Rex Wu & Victoria Critchley) have located off-chain assets worth over $1,500,000 which they wish to retrieve for the TC community
  • The co-signers propose the formation of a legal entity that can interface with government authorities and regulators, for the purpose of securing those funds
  • The co-signers will cover legal expenses, and have already queried attorneys while searching for off-chain assets… the co-signers will doxx / KYC to authorities
  • The co-signers will not be requesting any money from LUNC’s Community Pool, but will instead be paid a 20% finder’s fee on all assets they manage to retrieve
  • Net assets retrieved by the legal entity will be deposited within a “Terra Classic Recovery Fund”, after an 80/20 split (80% for the community, 20% for the co-signers’ fee)
  • Depending on legal mandates, the money will be disbursed as a single deposit into a KYC-validator multisig and/or via direct airdrops & grants to TC community & builders
  • After the funds have been secured and disbursed, the legal entity will be handed over to the Terra Classic community, to staff and use, as voted by community governance
  • The co-signers pledge to handle the proceedings with full transparency, and if this proposal passes will act for the benefit of the Terra Classic community & and its holders
  • The legal fees for this endeavour are somewhere in the range of $100,000 due to the estimated complexity of the proceedings, and will be covered fully by the co-signers
  • If no assets are retrieved, then the co-signers will not be paid anything, regardless of how much money they’ve spent on legal fees throughout the retrieval effort
  • The co-signers intend to secure at least $1,500,000 for the Terra Classic community, and possibly even more if their attorneys’ efforts are successful

Please note that the above is just a general outline for the sake of brevity.

For full details, see the individual sections below…

2. Introduction

The Terra Luna Classic community has long endured the consequences of being under-resourced and fragmented following the events that led to the collapse of the original Terra ecosystem, and subsequent abandonment of the chain by Terraform Labs and Kwon Do-Hyung. Despite its resilient and active community, Terra Classic remains financially constrained, severely limiting its growth potential, development initiatives, and ability to rebuild long-term value. What it needs is funding to pursue recovery and revitalization for its token holders.

The authors of this proposal have identified credible leads regarding off-chain assets that could be legally proven to have belonged to the Terra Classic ecosystem. If successful, potentially $1,500,000 or more will be secured and brought over to a transparent Recovery Fund, to be used for the benefit of the Terra Classic community. However, retrieving these assets requires the creation of a formally recognized legal entity - one capable of representing the interests of Terra Classic in legal proceedings and financial processes such as court briefs and public filings.

Thus, we propose the Terra Classic community authorizes the use of such a legal entity, for the purpose of laying claim to and retrieving said assets which used to belong to the chain. This entity will serve primarily as a liaison between the community and regulators, will have no control or claim over the current Terra Classic blockchain, will not influence its governance, nor will it impact this chain’s future development direction! Its purpose is to engage with financial institutions, asset custodians, and potentially regulatory bodies to reclaim funds that could be rightfully attributed to the Terra Classic community and its token holders.

3. Executive Summary & Detailed Course of Action

The purpose of this proposal is to seek community approval for the formation of a formalized and authorized legal entity, to transparently and lawfully pursue off-chain funds on behalf of TC’s community via the following steps:

  • Establish a legal entity under the auspices of the proposal co-signers to represent the Terra Classic stakeholders in legal and financial matters related to asset recovery.
  • Lawfully and transparently pursue over $1,500,000 in off-chain assets that can potentially be proven to have belonged to the Terra Classic blockchain and its community.
  • Secure funding for the independent blockchain and validator set without new ties to Terraform Labs, in order to avoid regulatory breaches and ongoing entanglements.
  • When required, make in-person appearances before regulatory bodies, government agencies, and disbursement courts, for the purpose of securing said funds.
  • The co-signers will be fully KYC’d to the relevant authorities and jurisdictions, ensuring full transparency, accountability, and compliance in these matters.
  • The co-signers will not seek any upfront funding from the LUNC Community Pool, neither now, nor at a later date, regardless of success in this endeavour.
  • The co-signers pledge to ensure long-term sustainability and regulatory alignment under the banner of the legal entity by adhering to governmental mandates.
  • The legal proceedings and entity will be self-funded by the co-signers, with them being prepared to invest up to $100,000 in judicial and administrative costs.
  • The co-signers will receive a 20% finder’s fee on any money recovered, but only if funds are successfully retrieved. The community pays nothing if no funds are secured.
  • All recovered assets will be vetted by authorized government entities like courts, which upon successful resolution will forward the money to the Terra Classic Recovery Fund.
  • Control over the TC Recovery Fund will be entrusted to KYC’d chain representatives who volunteer for the duty. This will be done under the watchful eyes of accredited attorneys.
  • Retrieved monetary assets (minus expenses like taxes & the finder’s fee) will remain in the Recovery Fund until at least five (5) fund stewards are selected as transitory guardians.
  • Once secured and received by the Recovery Fund, the assets will be used for the benefit of the LUNC community. The co-signers lay no claim to those assets, outside of their finder’s fee.
  • Final asset disbursement will be made pursuant to legal mandates. Depending on proceedings outcome, it may be necessary to prove absence of TFL affiliation to satisfy regulatory compliance.
  • If the chain fails compliance, or fails to secure at least five (5) KYC’d volunteer-representatives, then asset disbursement will be handled by the legal entity via airdrops/grants to the TC community.
  • Upon successful completion of its task, the legal entity will be handed over to the Terra Classic community for future use, and can be staffed by KYC’d community members who volunteer for the duty.

Note: We would have preferred to deposit all recovered assets directly into the chain’s Community Pool, but for reasons tied to TFL’s ongoing legal entanglements we are forced to set things up as outlined above on the advice of our legal counsel. Still, the extra administrative work is worth the effort because any money we manage to recover through the legal entity will be made available to the Terra Classic community as soon as possible via the Recovery Fund. Please note that it is critically important for the Terra Classic community to legally distance itself from Kwon Do-Hyung and Terraform Labs (TFL), due to both the former and latter currently being under judicial scrutiny for allegedly fraudulent conduct. In order for us to pursue, secure, and retrieve assets for the chain’s holders, we must comply with regulatory bodies and do things ‘by the book’! Otherwise we risk legal consequences and loss of securable assets. Likewise, any chain representatives (a la validators) who wish to volunteer as asset guardians will need to satisfy legal compliance (KYC).

All in all, we are looking to retrieve at least $1,500,000 from off-chain sources… possibly even more, if our intel is correct and things go according to plan.

4. Elaboration

i) Why the Terra Classic Community Is Struggling

Despite a massive loss of confidence after the initial crash in 2022, Terra Luna Classic has remained afloat thanks to its dedicated grassroots community and validator network. However, unlike many Layer-1 blockchains in the current market, LUNC operates without the financial support of a centralized foundation, VC backing, or significant institutional partners. Thus, the chain’s development and ecosystem growth relies almost exclusively on community-driven initiatives and the limited funds available in the Community Pool.

Unfortunately, the chain’s existing funding mechanisms are insufficient to support robust ecosystem development, technological innovation, large-scale marketing, long-term sustainability, or ambitious USTC repeg plans. While there is strong community interest in proposals such as USTC repeg strategies, buyback-and-burn initiatives, validator delegation incentives, and development grants, all of these efforts remain constrained by the financial limitations of the Community Pool! Not only that, the Oracle Pool itself is steadily dwindling, and validator payouts will be running thin in the near future.

In short, the Terra Classic community is in desperate need of restitution, and the off-chain assets we’ve identified will go a long way toward that. If we are successful in our endeavour, we will bring some of that money back to the people it rightfully belongs to - you!

ii) Why Off-Chain Funds Are Worth Pursuing

In light of this situation, the proposal authors have spent considerable time and money researching and identifying credible off-chain financial sources that may contain mothballed assets. Multiple bank accounts, custodial holdings, exchange balances, and escrowed funds were once linked to or earmarked for Terra (pre-crash), but were never reclaimed or disbursed. The LUNC community has a legitimate claim to some of these! Such funds could now, if legally validated, be redirected back to the Terra Classic community, which in some instances is the rightful heir of the abandoned or orphaned assets from the former ecosystem!

To be clear, this is not about speculative donations or hopeful funding appeals. The focus is on pursuing real, tangible, legally substantiated and recoverable funds, grounded in ownership records, transactional evidence, and historical documentation. However, pursuing such claims requires legal standing… which unfortunately the blockchain, as a decentralized entity, cannot provide on its own. Without a recognized lawful interface and representation, the Terra Classic community has no voice in courtrooms, no authority to sign documents, and no legal presence to assert rightful claims.

This is where the formation of a centralized legal entity becomes essential.

iii) Why This Approach Benefits the TC Community

This proposal offers holders a high-reward, zero-risk model:

  1. If no money is recovered, the community loses nothing. The proposal co-signers cover upfront all administrative, legal, and judicial costs.
  2. If funds are successfully retrieved, the net proceeds go directly into a transparent Recovery Fund, for the community's benefit.
  3. The community retains autonomy, transparency, and oversight pertaining to the final distribution of recovered assets.

The potential upside is tremendous! Based on preliminary legal scoping and early discussions with confidential sources, there is a highly credible chance of recovering at least $1,500,000 in off-chain assets for the Terra Classic community, perhaps even more depending on legal interpretation! Even if only a portion of that is secured, it would mark a seismic shift in the economic health of the original chain’s token holders.

A stronger asset balance empowers stakeholders to potentially:

  1. Support community initiatives and grants programs.
  2. Fund independent project developers and protocol upgrades.
  3. Deploy validator support packages to help them stay profitable and engaged.
  4. Provide liquidity for ambitious token strategies that require upfront investment.
  5. Execute significant, long-term buyback-and-burn campaigns alongside marketing pushes.
  6. Offer validator or staking incentives to attract new participants and builders.

In short, this proposal gives LUNC’s community a realistic path toward revitalization and recovery on a TFL-independent blockchain, without needing to raise or spend any current on-chain capital. It taps into external resources and converts them into actionable, decentralized value aimed at recovery and restitution!

5. Potential Difficulties & Legal Obstacles

While the potential upside of recovering these off-chain funds is significant, it’s equally important to acknowledge the inherent challenges, complexities, and risks involved in this kind of legal and financial endeavour. This is not a simple or guaranteed process; what we’re proposing is time-intensive, procedurally complicated, and above all, costly.

Below are the primary categories of obstacles the legal entity will need to overcome:

i) Legal and Jurisdictional Barriers

Asset recovery is governed by varying legal systems across multiple jurisdictions, depending on where the assets are located or where the custodians are incorporated. The legal entity must:

  1. Retain competent legal counsel via an accredited law firm with expertise in cross-border asset recovery, crypto asset tracing, and banking law.
  2. Successfully navigate KYC/AML compliance, proof-of-beneficiary requirements, and data privacy regulations... all while pursuing multiple sources of funding.
  3. Demonstrate that the Terra Classic community (via its governance approval and backing) is the legitimate successor and beneficiary of the funds in question.
  4. Present a coherent case in jurisdictions that may be sceptical of decentralized governance models and non-corporate entities such as crypto chains.

This requires precise documentation, expert representation, and well-prepared legal briefs… each of which adds to the time and financial burden.

ii) Institutional Resistance

Current custodians of the potentially recoverable assets may not be cooperative or responsive by default. These institutions will probably:

  1. Require notarized legal claims or court orders before releasing any money to the Terra Classic community.
  2. Demand detailed structure and compliance information from the legal entity and its officially authorized handlers.
  3. Challenge the legitimacy or authority of the claim, especially when dealing with a decentralized blockchain community.

These challenges may necessitate prolonged legal correspondence, official demands, or even litigation, which can escalate legal costs and timelines significantly.

iii) Financial Commitment and Risk

The authors of this proposal are prepared to commit upwards of $100,000 in out-of-pocket legal and administrative expenses, including but not limited to:

  1. Engagement of professional attorneys
  2. Official formation of the legal entity
  3. Ongoing filing and court / judicial costs
  4. Due diligence and asset (forensic) tracing
  5. Compliance consultations and documentation fees

Importantly, these upfront costs will be funded regardless of overall success or failure in retrieving the off-chain assets. If no assets are successfully recovered, then the proposal co-signers absorb the full financial loss, and the Terra Classic community incurs zero cost or legal liability. Essentially, this is for the co-signers a risk-intensive, front-loaded endeavour, requiring personal capital, patience, and legal endurance. The decision to undertake this initiative was not made lightly, but is being done in service of the long-term sustainability for stakeholders. A legal entity is required to act as liaison between the community and authorized government agencies, as well as to shield the LUNC community and act as a bridge between it and regulatory organs!

This recovery effort may take multiple weeks to reach resolution. Court cases, compliance reviews, asset release negotiations, and inter-jurisdictional document processing all involve slow-moving timelines. Community patience and trust will be required as the legal entity and our attorneys work through this process, providing periodic updates as progress is made. What complicates matters is the fact that the sourcing and retrieval of these funds is a time-sensitive matter. The window of opportunity is rapidly closing, and the Terra Classic community must lay claim to these assets as soon as possible. Then once the legal matters are underway we will be able to pursue the money, but it is critically important to get moving sooner than later, lest the community loses this opportunity.

6. Guardrails & Guarantees

Crypto itself is a trustless space, but as mentioned above, both proposal co-signers will be known to the authorities as compliant via disclosed identities, and their names will be on legally binding documents.

For the sake of thoroughness, we are including a list of what the Terra Classic community can expect from us and this plan, which clearly defines the scope of our endeavour…

  • Formal audit of all retrieved fund flows
  • Frequent public updates (where legally permissible)
  • Payments, reports, and legal updates both posted and tracked
  • The entire retrieval effort will be self-funded by the proposing team
  • The Terra Classic treasury and Community Pool will not be drawn from at all
  • Fiduciary duties (we must act in the best interest of the community at all times)
  • This appointment does not give control over LUNC’s governance, treasury, or chain development
  • The community-approved mandate cannot be sold, reassigned, or delegated without a new governance vote
  • Only if recovery is achieved will a 20% success fee be paid to the proposers… if there is no recovery, no fee is due
  • Terra Classic’s community is indemnified and shielded by the legal entity, and will receive 80% of all recovered net assets
  • The legal entity used for the proceedings will be handed over to the community upon conclusion, and can be staffed via governance votes
  • These terms will be formalized in a full Legal Agency Agreement, executed immediately upon passage of this proposal
  • Final report to the community, and passing of acting powers upon conclusion of fund disbursement endeavours

Once this proposal is approved through governance, the legal entity shall be granted an irrevocable and exclusive mandate to pursue the recovery of specific off-chain funds on behalf of the Terra Classic community, until such a time as the court proceedings are completed, and the legal entity is handed over to the Terra Classic community. This mandate shall not be subject to reversal, revocation, or further governance votes, as such actions would interfere with legal standing and jeopardize ongoing or future recovery efforts. It is thus paramount that the conditions outlined herein remain binding for the duration of the legal entity’s involvement in this matter, to ensure an expeditious pursuit of off-chain assets for Terra Classic. Likewise, the terms and conditions outlined herein which bind the co-signers will remain unchanged, as will their fiduciary duties to the Terra Classic community!

Put simply: this governance proposal is legally binding for both sides (the Terra Classic community, and the co-signers).

7. Conclusion & Call to Action

We believe this initiative is a milestone opportunity for the Terra Luna Classic community… one that requires zero risk to it, but holds the potential to unlock over $1,500,000 in disbursable assets for community recovery!

This is not a vague promise or baseless endeavour, but rather a serious and professional effort to pursue real, legally claimable and quantifiable assets. The proposal authors are willing to act transparently, at great personal cost, and in full view of the community, to help restore financial strength to token holders harmed by LUNC’s impoverishment, and recover assets owed to the chain’s community. We have in detail weighed the risks of this endeavour, and after indepth discussion with attorneys we’ve decided to pursue this plan of action. If successful, we will bring a seven-figure sum for the recovery and revitalization of the Terra Classic community! But first, governance approval is needed before we can take legal action on behalf of the chain’s token holders.

So we respectfully urge the Terra Classic community to support this proposal and vote YES to:

:white_check_mark: Authorize the creation of a centralized legal entity for asset retrieval
:white_check_mark: Support the performance-based recovery model with a 20% net finder’s fee
:white_check_mark: Empower the co-signers to represent the community in (IRL) legal channels
:white_check_mark: Accept net retrieved assets into the TC Recovery Fund for TC community benefit
:white_check_mark: Agree to comply with legal/court mandates for the purpose of asset disbursement
:white_check_mark: Uphold the terms & conditions in this proposal until proceedings are finalized
:white_check_mark: Inherit (and staff via KYC) the legal entity once its work has been completed

Together, we can take this first step toward reclaiming assets that rightfully belong to the Terra Classic community!

For discussion and transparency, we welcome feedback on this forum prior to submission for on-chain vote.

Co-signers,

Rex Wu
Victoria Critchley

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8. Addendum - Q&A Section

Below is an exhaustive Q&A section that aims to cover all possible outcomes, while also addressing and dispelling any uncertainties…

:red_question_mark: Why is this proposal necessary right now, why not earlier or later?
Time-sensitive legal options still exist for the Terra Classic community to recover value north of $1,500,000 related to the collapse of USTC/LUNC. This proposal gives our legal entity a mandate to act on behalf of the community while the opportunity is still available.

:red_question_mark: Who is behind this retrieval effort?
Two long-time community members – Rex Wu and Victoria Critchley – who are funding the legal effort independently and without requesting chain assets. We want the Recovery Fund to help revitalize the TC community with assets that rightfully belong to them.

:red_question_mark: Will the proposers be doxxed?
Yes, we will be fully doxxed to courts, regulators, asset custodians, legal representatives, and authorized institutions as required by law. If KYC is requested by government agencies, we will submit to that as well. Full transparency is required in these matters.

:red_question_mark: Can the community trust you?
Yes, our real names are listed as co-signers on this proposal, and will be a part of legal documents going forward. Furthermore, we will be bound by law to serve in the best interest of the chain.

:red_question_mark: Why does a legal entity need to be involved?
Blockchains cannot appear in court. Especially decentralized ones like LUNC. A legal entity is required to sign, file, and manage legal actions on behalf of the Terra Classic community, as a governance-appointed liaison.

:red_question_mark: And what exactly is this legal entity?
Think of the legal entity as an authorized, transparent, central representative for the Terra Classic community, invested with the power to seek restitution by claiming funds that belong to TC token holders (stakeholders), and deliver them to the community as quickly and efficiently as possible, all while respecting and working within legal mandates.

:red_question_mark: What happens if no funds are recovered?
Then nothing is paid to us. No downside to the community. The legal entity is dissolved.

:red_question_mark: What authority are you being given if this proposal passes governance?
Strictly defined authority to pursue external legal fund recovery for the benefit of LUNC holders, and deliver said assets to the community. The mandate ends automatically when the legal process concludes and disbursement is finalized.

:red_question_mark: Can you transfer or reuse this mandate later?
No. The mandate (via this governance proposal) is single-intent and non-transferable for this chain. Any future action on Terra Classic would require a new community vote via an unrelated governance proposal.

:red_question_mark: Can your legal entity be used for unauthorized activities, like making deals with CEXs or DEXs tied to LUNC and USTC?
No. Its scope is narrow and strict - to locate, pursue, then secure money for the TC community, and serve as a spearhead in the legal proceedings which result from that.

:red_question_mark: Is there any cost or liability to the LUNC community?
No. The legal effort is entirely self-funded, and will probably run upwards of $100,000. The community pays nothing, regardless of outcome.

:red_question_mark: Can you change your fee or claim more later, as some sort of ‘bonus’ pay?
No. Our finder’s fee is fixed and cannot be increased, renegotiated, or extended. If we fail to secure any funds, we don’t get paid a penny.

:red_question_mark: Is there precedent for what you’re trying to do?
Yes! Some time after TFL’s disavowement and abandonment of Terra Luna Classic, a multisig with roughly $4,200,000 worth of digital assets was located and brought to the LUNC community’s attention. Sadly, the chain never acquired those funds due to multiple failed governance proposals. Regardless, the precedent is there. We will be pursuing extra-chain funds that we’ve identified, and which we believe Luna Classic holders have a legal right to.

:red_question_mark: So you’re going after that $4,200,000 multisig?
Not exactly… the assets in that multisig – as well as the wallet itself – are no longer directly accessible. That opportunity has passed, and the Terra Classic community failed to capitalize on it. But there are other potential opportunities we have located and will be pursuing if the community empowers us to represent them in these matters. Unlike for that multisig, however, we require professional legal expertise and a registered legal entity in order to secure potential assets for the TC community in a lawful and binding manner. Hence this proposal. We want to do things by the book, so that whatever money we secure will actually remain available to the community in a safe and transparent manner.

:red_question_mark: What happens if you manage to secure just enough money that your finder’s fee covers the legal expenses, but nothing else?
We are willing to accept that outcome. We won’t be seeking further restitution from the TC community for our work.

:red_question_mark: Why are you risking upwards of $100,000 of your personal money on an unsure bet?
Because we’ve consulted with attorneys already, and we believe we have strong leads pertaining to multiple potential assets we’ve located, that can be retrieved using legal channels. Securing and retrieving those assets will not be easy, however, and will require possibly months of back-and-forth by expensive professional attorneys (hence the estimated six-figure legal bill), but we believe we have a strong case and will triumph in the end. If we are correct, the community stands to gain north of $1,500,000 from this. If we are wrong, the only party who loses money is ourselves.

:red_question_mark: Would it be possible to secure more than $1,500,000?
Yes, but we don’t want to overpromise. As mentioned above, we will be looking into multiple possible assets we could retrieve for the Terra Classic community.

:red_question_mark: What happens if you manage to secure more than $1,500,000?
Then we would suggest setting up a “Validator Compensation Fund”, to help them out. But that’s just a suggestion, and is beyond the scope of this proposal.

:red_question_mark: How much funding can we expect in a best-case scenario?
That’s dependant on our legal team and how well they navigate the upcoming proceedings. But rest assured, they will work hard to locate and retrieve as much money as possible for the Terra Classic community.

:red_question_mark: Does your 20% finder’s fee increase if additional money is found and retrieved during the legal proceedings?
No, it’s always fixed at 20%, regardless of how much money we secure. We will never ask for more than that.

:red_question_mark: Don’t you think 20% might be too much?
No, because we have to cover a six-figure legal bill while having zero guarantees. And there’s always a chance we fail to secure any money at all, which still leaves us footing said bill. Furthermore, we’ve put in a lot of work locating asset sources, and finding lawful ways to retrieve that money for the Terra Classic community, which wouldn’t even be possible without our months-long efforts.

:red_question_mark: You mentioned that “Final asset disbursement will be made pursuant to legal mandates…” What does that mean, exactly?
It means there may be strings attached to some of the off-chain assets we’re going after. Specifically, that we’ll have to prove LUNC isn’t affiliated with TFL anymore. Please note that we’re not making personal judgements against TFL or Do Kwon, it’s just that legally speaking the Terra Classic community needs to show this chain isn’t comingled with either of them, since both Kwon and TFL are currently embroiled in legal troubles, and we really don’t want any part of that. Hence one more reason why a formal legal entity is required to represent the chain - these things can’t be done through unofficial letters; very specific types of legal briefs and filings are needed to satisfy regulators and government mandates. There’s a good reason why we’ll run up a $100,000 bill chasing these funds, and it’s mostly to cover attorney fees over the coming weeks to months.

:red_question_mark: What prevents you from stealing the recovered funds?
It’s impossible for us to misappropriate the funds simply because government agencies and accredit attorneys will oversee the disbursement. Furthermore, we are legally bound to follow the recovery split outlined in this proposal (80/20). Fund movement will be transparent and traceable via publicly available documents. Any violations, no matter how minor, would trigger legal consequences for us. To protect ourselves and prevent any possible mishandling, we will not be in personal posession of community assets - money retrieved through our efforts and legal entity will be forwarded to the Recovery Fund.

:red_question_mark: So your legal entity will act as a bridge to recover potential funds, but without you personally coming into contact with that money or having direct access to it?
Correct! The legal entity protects us, and the TC community. And it is needed for us to file formal documents on behalf of the community, with the aim of retrieving external funds that we’re hoping to prove belong to it.

:red_question_mark: Will these legal proceedings interfere with burn initiatives or development funding?
No, not at all. This does not touch the chain’s treasury or any burn mechanism. It introduces new value for its community - not expense. Our aim is to retrieve funds, not extract them. We will not touch the Community Pool, nor will we request spend proposals tied to this one. We only get paid our finder’s fee if we manage to secure assets from external sources.

:red_question_mark: Can’t the LUNC community file the paperwork on their own?
Not without a formalized legal entity and professional counsel, no. But paperwork is just the beginning anyway; negotiating with asset custodians while formally challening any recalcitrant ones requires professional expertise, all the while taking care to remain compliant with regulators and legal mandates. And even if all that were possible “off the cuff”, the community wouldn’t know where to look for these assets, nor how to frame the legal briefs - it’s taken us months of investigative work to formalize a robust action plan for the retrieval of these assets. Furthermore, any decentralized effort by the community would require multiple, back-to-back governance proposals to authorize along the way. The legal process will probably take weeks to resolve, possibly months, and each incremental step would necessitate not just a governance proposal to approve it, but also a spending proposal to release money to the law firm handling the proceedings. It’s simply not feasible in practice. LUNC is a decentralized blockchain, and while that’s a strength in many ways, it’s also a liability when it comes to courts and legal proceedings where its community requires tangible representation. Hence the need for a formal legal entity and professional attorneys that can handle things in a timely manner, while also reporting back to the community.

:red_question_mark: Will you post updates and legal filings?
Yes - where legally permissible. Updates, audit trails, and final reports will be shared publicly. Our names will be on these documents, auditable by anyone with the desire to read them.

:red_question_mark: What if courts or regulators refuse to deal with a decentralized blockchain community like Terra Classic?
This is exactly why a legal entity is required to represent the TC community in these matters. We are modeling the vote and agreement on real-world legal standards, hence the need for professional attorneys who’ll handle the proceedings and filings, as well as making court appearance where necesary. If clarification is needed, we’ll adapt as required without altering the community-approved terms.

:red_question_mark: What if you manage to retrieve the funds, but they end up frozen, delayed, or taxed?
We will comply with all relevant laws and custodial procedures. If taxes, regulatory fees, or escrow restrictions apply, those will be transparently reported. The 80/20 split will apply to the net amount received after any legally required deductions, not gross claims. Community funds will never be diminished outside this legal context. Everything will be logged and submitted to the community. All transactions will be auditable.

:red_question_mark: Can you settle the case without asking the community again?
Yes, if the terms match the scope and fee approved here. Any funds returned will still follow the agreed 80/20 split and be transparently handled. Naturally, it is our intent to locate and retrieve as much money for the community as possible. We can’t guarantee success, but we estimate we have a solid chance of retrieving at least $1,500,000 via this endeavor. We will be looking at multiple potential asset sources that could be secured via legal precedent, and we will be pursuing each to the best of our ability. We will operate with full transparency and within the confines of the law. We will supply the authorities with all required personal and financial information.

:red_question_mark: What happens to the legal entity if you’re successful in retrieving funds for the chain?
Once the disbursement of funds has been settled, we will hand ownership of the legal entity to the Terra Classic community, to do with as they wish. It is our hope the community will then vote to appoint prominent and trusted (KYC’d) members to staff and steer the entity for any future endeavors, but we ourselves will not take any part in this, nor will we attempt to influence the staffing. We trust the community to do what is best for it, and handle things in a transparent and democratic manner, as befits the ethos of Luna Classic.

:red_question_mark: Why a 20% finder’s fee? What made you choose that specific number?
Finder’s fees are ubiquitous in the crypto space. We chose 20% due to needing to cover legal expenses. We didn’t want to request funds from the Community Pool, and are prepared to cover the upfront legal costs out of pocket while pursuing money for the community. We estimate the overall legal expenditure will fall somewhere between $75,000-150,000 due to billing by multiple professional attorneys over a period of months. The finder’s fee will allow us to cover those costs, while also paying the remainder to ourselves for the months of independent work already done on the community’s behalf by locating and securing for it external funding. If we fail to retrieve and secure the assets we’re going after, then we will have funded this whole endeavor at a personal loss. We are prepared to take that risk.

:red_question_mark: Why choose to front the legal costs? Why not instead sign a ‘no-win-no-pay’ contract with a law firm?
We did ask, and were cited a 33% retrieval fee. Law firms that perform this kind of work usually claim between 30% to 40% of retrieved assets as payment, if contracted via such clauses. Obviously, it would not be in the community’s best interest to hand almost half of its retrieved money to a law firm. Alternatively, we could have requested a six-figure sum from Terra Classic via a spend proposal, to cover the necessary legal fees over the coming weeks, but given the chain’s current state, the community probably wouldn’t have agreed to that. So in the end we decided to cover the legal retainer out-of-pocket and hope for the best.

:red_question_mark: How much will this out-of-pocket legal retainer cost you?
It costs $50,000 upfront to sign the retainer and have attorneys begin a formal inquiry into off-chain assets. That will probably double by the time the proceedings are finished, depending on how long the whole process takes.

:red_question_mark: Why not send the recovered funds to the chain’s Community Pool? Why stash that money in an off-chain fund?
Three reasons. First, we’re retrieving those assets for the Terra Classic community, not the chain itself, because legally speaking the community can be represented in court while the chain can’t. Second, from a technical standpoint, for the recovered assets to be capable of reaching the chain’s CP they’d need to be converted into LUNC or USTC by purchasing either (or both) on the open market… and that is beyond the scope of this proposal. Third (and most important), TFL is currently embroiled in legal proceedings, and our attorneys have advised us that certain LUNC assets could fall under the umbrella of TFL property, which means a bankruptcy Court could theoretically order an injunction to prevent blockchain money (like within the Community Pool) from being moved or disbursed! Liquidation and forfeiture are often used to convert assets into funds to satisfy creditors, so in this case it’s better to keep any money retrieved off-chain, for the purpose of safeguarding it until it can be disbursed to benefit the Terra Classic community. Again, Terra Classic must not comingle its retrieved assets with TFL in any way, even if that means going to extra lengths to ensure the chain’s community is being 100% compliant with regulatory mandates by remaining separate in legal filings. There’s a hundred small details like this which we wouldn’t have been aware of had we not paid for professional attorneys to advise us.

:red_question_mark: Why not send some of the retrieved money to the Oracle Pool, to help validators?
We’ve discussed it, but it could bring the same problems as depositing in the Community Pool (explained in the question above). So we think it’s best to keep things simple, and deposit any retrieved money in the Recovery Fund so the community can benefit from it directly and without worry.

:red_question_mark: What happens if no validators or community representatives want to take on stewardship of the recovery fund… or they do, but they refuse to KYC?
Then the money will sit there until the conditions are met. It won’t be lost. The community can always appoint new handlers for the fund as long as the chain remains legally compliant and isn’t in violation of any court mandates (which is why it’s important we legally distance ourselves from TFL). Point is, that money will always be used to help the TC community - that’s what it’s there for, and what it was originally meant for.

:red_question_mark: Can you share these sources of potential assets and funding you’ve located?
We’d love to, because that would make passing this proposal quick and easy, and would give hope to the TC community about incoming funds… but our attorneys have warned us that doing so could significantly reduce the chance of success in these matters due to complex legal frameworks that are beyond the scope of this proposal. For the sake of the community and its recovery fund, we need to keep these sources unnamed until all the necessary legal paperwork has been completed and filed with the proper authorities. And we cannot move ahead on that until this proposal has passed governance and the community has agreed to empower us as their representative in these matters. Please note that we’re dealing with regulators and legal entites here, so discretion and care are needed if we wish to remain compliant with the law. Hence the need for a legal entity of our own which can represent the TC community in these endeavors.

:red_question_mark: Are these off-chain assets tied to Risk Harbor in any way? Is that what you’re going after?
No. But if we managage to secure money for the TC community with this initial effort, then that opens the way to perhaps look into and pursue the Risk Harbor funds which are still owed to the Terra Classic community. That would need to be a separate proposal, though, and structured differently - it’s outside the scope of this one.

:red_question_mark: What guarantee does the Terra Classic community have that your legal entity will not overstep its bounds?
It cannot overstep, because the exact terms are strictly defined in this proposal, and the entity’s own framework. Both are legally binding. Failure to comply with government regulations would mean risking federal prison.

:red_question_mark: In simple words, do you believe you have a good shot at success?
Yes, very much so! We wouldn’t be risking upwards of $100,000 on prolonged legal fees if we didn’t think we could succeed in what we’ve outlined in this proposal.

:red_question_mark: Anything else to add?
Please vote for this proposal, and help us secure over $1,500,000 in assets that rightfully belong to the Terra Classic community!

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Excellent. I am deeply impressed.

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There are many things I don’t understand, but Terra/Luna was decentralized. Terraform Labs was centralized, and the only one with the power to withdraw the amount you’re talking about is this. It’s clearly misappropriation, and you have to go against Terraform Labs and win the case. Furthermore, I assume you have proof of that transaction and the wallet it came from. Therefore, this is recorded on the blockchain, and if you run a query, you’ll know if it was made from a multisig and who signed the transaction, since you need multiple signatures, which would mean multiple people were involved. If this amount hasn’t been touched, it could be for several reasons; obviously, you’re talking about several very serious crimes. I assume the transfer was made from the community wallet, but in any case, you’ll need the signatures, or if it’s in a trust, the law will return it to you. But you’re not Terra/Luna, and the law won’t grant it to you unless an entity is created to take responsibility, I suppose.

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  1. I’m a fan of having some work already done before coming up with a proposal. This is perfect example of good practice.

  2. Love the no-risk approach (no upfront payments) because we have few potentially high expenditures in the pipeline – SDK 50 + UST protocol implementation. CP money is small, and any additional funding would also come in handy.

  3. I’m sure had we not ran Moon Rabbit away, this would’ve been done long time ago. I’m glad to see you’re both over the “KYC” vote and are ready to support the community again. Happy to read coherent proposals with clear action plan again, and with legal stuff covered. Huge contrast with other proposals which simply want to barge in and burn TFL wallets while the legal bankruptcy proceedings are still ongoing.

  4. Not sure we need that LLC (it will be U.S. based yes?) – maybe it is possible to use LL69’s LLC as a vehicle for this (but his is in NL) or any already existing one? However, if we keep this entity and staff it with recognized community members, it could be a stepping stone for us in terms of actual IRL exposure – we could be in contact with regulatory bodies (receive their feedback re our product) and receive correspondence etc. It’s like finally opening up diplomatic channels between some 3rd world country (Terra) and the rest of the developed world. This LLC can be dissolved by you afterwards as well, right? In the event the community does not want to have it and it holds $0/does not affect the recovery fund.

  5. “is critically important for the Terra Classic community to legally distance itself from Kwon Do-Hyung and Terraform Labs (TFL)” – the more the reason not to touch any TFL wallets while TFL and Do Kwon are both heavily in legal proceedings.

  6. “any chain representatives (a la validators) who wish to volunteer as asset guardians will need to satisfy legal compliance (KYC)” – so far I think we have only JiL, Strath and Frag as KYC validators. They have those SolidProof certificates.

  7. If we have it in USD would be great to cover expenses in USD not comm pool, such as the upcoming SDK upgrade and ust protocol implementation. The 3rd party contractors would rather receive the payment in $ instead of UST or LUNA.

  8. Was this prop also reviewed by the attorneys? Does this constitue a legally binding and demonstrable authorization from Terra community to you? Usually PoAs contain unique identifiers of both. Will you be able to tie this proposal (authorization) to the legal entity you will create?

  9. If you were some unknown people I’d suggest having somebody from the community on board as well (Redline, Trev for example or LL69) to have some kind of ‘oversight’ over the transparency and ethics of exercise of our authorization. But since you’re well known to us, that is not necessary.

  10. After successful attempt at this, will it be possible to share the legal know-how with us? I really want to know why pre-crash $ does not belong to TFL or bankruptcy estate, but instead it belongs to us (post-crash community). And why bankruptcy lawyers have not tried to add these funds to the bankrupcty estate.

  11. Is there a precedent where a decentralized community authorizes somebody to represent them and this actually works (i.e. the authorities, for example, respect such authorization)? Will the recovery fund (company register, bank) respect our blockchain governance vote to have e.g. Frag as the manager of the fund? I’m asking these questions to check if 1 single proposal will really be sufficient and that all bases are covered. This will only be good for both us and you :blush:

-LunaRocket

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In any case, Terraform Labs owned their wallets and intellectual property. Under no circumstances should any other user own community assets. To win a lawsuit, you have to go against them. You’re being accused of a serious crime.

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Look, a decentralized blockchain or community wallet has many users. To get your funds returned, you need 100% of users to file a complaint and claim the funds. That’s why Terraport, for example, can’t recover the funds. The offender can be punished, but the funds cannot be recovered. Get informed.

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Could you burn the recovered funds instead? Or at least let the community vote on what to do it with it ? whether to burn them or follow your suggestion

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(post deleted by author)

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What’s the point in retrieving $1.5m just to burn it? How will you pay for chain upgrades and dev work?

Please explain the logic here.

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I thought the funds were in LUNC or USTC.
In that case, if they re in USD, yes, just recover the funds as proposed.
Then let the community decide what to do with them.
Most likely, the best option would be to use them to buy back LUNC and USTC and burn them.

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Does this proposal include filing a claim for assets in the TFL bankruptcy case?

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No. Just no
What effect do you think burning those funds would have?

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There’s already over $1M in the CP, why would you need more? Especially with a bull run expected, that amount is likely to grow significantly. Adding another $1M just baits the sharks. What’s the upside?

The supply of LUNC and USTC is still massive. The priority should be to burn as much as possible. If funds are ever truly needed for a specific purpose, governance can always be used to raise them later.

Too much money rots ecosystems. Builders need to stay hungry to keep building. Start handing out easy money, and you create dependent, bloated structures. Keep socialism out of LUNC.

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  1. It goes without saying that releasing the sources of off-chain funds could jeopardize the acquisition process, but a precise accounting of the funds (provided by and stamped by the firm) before the funds are moved, or any action is taken, should be expected (this is basic due diligence). This should be covered in the clear and transparent communication with the community team spoken about above, but still it needs to be said since the wording is unclear.

  2. Who is our legal team? The identity of our legal representation is more important than Rex and Pho revealing their identities.

At no point does the prop reference the legal entities used thus far, nor does it give any indication of the firm that will be doing the real work. This is important for obvious reasons. We (the community) expect the lawyers to be able to carry out the terms outlined in the prop, and these should be public facing figures with easily searchable professional credentials.

  1. How will the communication with the community be handled? And why is there no reimbursement for the team handling this portion of the prop?

This is potentially a large workload. This team will be tasked with reading, digesting, and preparing statements on what sounds like many sources of documents all in complicated legalese. This could take many hours of work and is perhaps the most important aspect of the community’s engagement with the prop. It must be carefully considered and is the part that will ensure continued community support. After all, this entity will receive the brunt of abuse from community members and should not be expected to do this all for free when we are giving 20% to the finders and expecting to gross 1.2 mil

  1. Dissolution of the legal entity created for the purpose of this proposal should be clearly expressed as a mandate of the prop.

The community representatives elected for this proposal are being elected to handle this proposal only. We must ensure that any authority granted them ends when the prop has run its course. Any further representative power is outside the scope of this proposal and should not be speculated upon herein.

Prego! Bravissimo! Keep up the good work!

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