To me it would not make sense to assume that the bankruptcy court will go after CP because they already burned LUNA and UST from TFL wallets.
In any event ofc better be safe than sorry - if the lawyer says to keep it all separate, let’s do it.
2 Likes
I deeply hope this is just a joke. Please, let this be a joke…
2 Likes
Friends, I want so badly to be a yes on this and give it my full endorsement for whatever that’s worth, but it’s seeming less and less likely.
My main problem rn is: I’m not sure that a governance proposal on a decentralized chain with no central authority or official representation, legal, or otherwise, is legally binding in a court of law in whatever jurisdiction this is all happening in. Therefore, all of the promises made in the proposal may or may not mean a damn thing. There are those who justify it by saying, “well this will all be in black-and-white” but we will not see any legal documents at all, until after the governance proposal is passed, and you both are granted authority to represent the chain by forming this legal entity. That’s too late and not the way it usually works. It’s certainly not something I’m personally comfortable with. In my line of work we deal with contracts all the time. We get contracts sent to us and we send contracts to others. These legal documents are submitted for review and approval before anything is signed and official. You propose here to do that in reverse.
I don’t believe I’ve ever received or issued a contract that we and the other party didn’t need to negotiate to some degree. Only if/when all parties are satisfied with the wording, and usually after being reviewed on both sides by attorneys, are things signed and authorized. In this case, we are being asked to issue a work order that is nonnegotiable and non-revocable without the benefit of a preceding legal review. No standard three day right of rescission or anything.This is a huge, “trust me, bro” and I can’t bring myself to take that leap.
Could you possibly consult with your legal team and figure out some way to solve this dilemma? If so, it sure would bring me, and I trust many others, much closer to a yes vote. I would truly love to be a yes vote.
I look forward to your reply however I would like to request that you do not reply with personal assurances as to what is legally binding and what isn’t. Unless these assurance are in writing and signed by a law firm, they are no more than speculation to me.
Thank you and sincerely, best of luck with this.
3 Likes
We’d like to thank the community for sending us additional questions via DMs, tweets, and spaces.
We’ve collated them into a FAQ, and have done our best to address all the points raised by the community thus far.
Given that some of you have employed LLMs in your queries, we’ve likewise passed our proposal through an AI for additional scrutiny, and have included its replies in quotations marks!
The FAQ format is as follows:
- COMMUNITY QUESTION
- OUR TEAM’S ANSWER
- AI CONFIRMATION
Could the legal entity gain undue control or influence over Terra Classic, including governance or the blockchain itself?
No. The legal entity is strictly off-chain and cannot influence or interfere with on-chain governance, validator operations, or community-controlled assets. Its scope is limited to off-chain legal recovery and representation.
“This legal entity will not be connected to the Terra Classic chain itself and will not interfere with governance, chain parameters, validator operations, or multisig management.” (Section: Scope)
“No DAO-held funds, validator authority, or chain-level control is being requested or granted.” (Section: Clarifications)
What safeguards prevent the legal entity or co-signers from misusing, stealing, or mismanaging the recovered funds?
The proposal establishes that all fund disbursements will occur under the supervision of courts, regulators, and/or legal professionals… under full transparency, and backed by official documentation. Following that, the retrieved funds will be managed by independently verified KYC’d community members and validators who satisfy compliance, not the proposers. In fact, the proposal plainly states the proposers won’t personally handle any retrieved assets both for the sake of protecting themselves as well as the community.
“All distributions will occur under regulatory, court, and legal supervision.” (Section: Recovery Fund Management)
“Stewardship will rest with verified, KYC’d members of the community — not the proposers.” (Section: Stewardship & Oversight)
“The Recovery Fund will not be controlled or operated by the proposers.” (Section: Clarifications)
Will the legal entity or its co-signers legally own the recovered funds, or simply act as stewards?
The proposers will not own the recovered funds. The legal entity is a vehicle to initiate the recovery, while the funds will be held and disbursed under third-party supervision. The proposers claim only their 20% finder’s fee.
“Neither proposer will have ownership rights over the funds recovered.” (Section: Clarifications)
“The fund will be held and disbursed under court or regulator supervision, not under personal discretion.” (Section: Recovery Fund Management)
What prevents the legal entity from changing its purpose or mandate after formation?
The contents of the proposal will be included in legal filings, and are thus binding for the proposers. Any deviation from the stated terms would be legally indefensible and subject to challenge. Put simply, our hands are tied as to the amount of control and leeway we have during the proceedings… and this was done on purpose to ensure maximum compliance with the law, as well as minimum deviation from governance. We have to abide by court and regulator mandates.
“The contents of this proposal will be submitted to attorneys and included in legal filings and case materials.” (Section: Legal Framework)
“The mandate, purpose, and scope are fixed — not open to revision post-vote.” (Section: Clarifications)
Could the co-signers or legal entity walk away with the money, and if so then what legal consequences would apply?
No. Fund handling is subject to legal, regulatory, and court-supervised processes. Misappropriating funds would be considered fraud and prosecuted accordingly. We’re pursuing this endeavor under our real names, which will be on all the legal documents and freely auditable by anyone with the time and inclination to do so.
“All distributions will occur under regulatory, court, and legal supervision.” (Section: Recovery Fund Management)
“The proposers are fully liable for legal, financial, and regulatory risk — not the community.” (Section: Clarifications)
“If misconduct occurs, consequences will fall on the proposers, who are acting under their real names.” (Section: Transparency & Accountability)
Does the legal entity expose the blockchain to legal liability, lawsuits, or reputational risks by third-party groups and/or independent actors?
No. The legal entity operates independently of the blockchain, and all legal, financial, and operational liability rests solely with the proposers. The chain itself isn’t even part of the entity’s mandate.
“No legal liability shall transfer to LUNC holders, validators, or DAO participants.” (Section: Legal Liability)
“All legal, financial, and operational responsibility rests entirely with the proposers.” (Section: Clarifications)
If things go wrong — lawsuits, misuse, or disputes — does the community have any legal recourse or ability to dissolve the entity?
While the community can’t dissolve the entity by vote for the duration of the proceedings (as that would effectively nullify asset retrieval efforts), legal and regulatory channels exist to hold it accountable. Complaints can be submitted to courts or regulators if misuse occurs. But overall, the legal entity’s focus is on asset retrieval, and it cannot be used to hijack chain governance or make deals with third parties independently of the Terra Classic community. Its purpose is to work for the community’s interests, not against them.
“As a legally recognized entity, it will be subject to civil and regulatory consequences if misused.” (Section: Legal Framework)
“Community members may report misconduct to relevant regulators if necessary.” (Section: Stewardship & Oversight)
Is there any risk courts won’t recognize the legal entity or that it could be held up in litigation?
While legal processes always carry some risk, the proposal confirms that professional legal counsel has been consulted, and the entity will be formed in a compliant jurisdiction, thus minimizing any risk while working for the Terra Classic Community. In short, we’ve done our due diligence on the matter, and wouldn’t be attempting asset retrieval if we weren’t sure we had a strong case.
“We have consulted legal counsel during the preparation of this plan.” (Section: Legal Framework)
Will the community see and approve the legal documents, agreements, and audit reports before anything is finalized?
Legal documents will be filed after the proposal passes, based on the exact contents outlined within the proposal. The vote itself is the community’s opportunity to approve the scope and terms, and is legally binding. Sharing internal briefs and sensitive information about asset filings prematurely would not only endanger the entire retrieval effort, it would also invalidate most of the work done over the past months in locating viable sources and preparing potential litigation in case it’s needed. Rest assured, we can only execute on the terms and conditions approved by the community, which means what’s outlined in the proposal will make its way into legal documents - nothing more, nothing less.
“The contents of this proposal will be submitted to attorneys and included in legal filings and case materials.” (Section: Legal Framework)
“The mandate, purpose, and scope are fixed — not open to revision post-vote.” (Section: Clarifications)
Are we rushing into a decision without full clarity on legal terms, risks, and accountability mechanisms?
No. The proposal clearly outlines the responsibilities, limitations, and structure of the legal entity and the fund. It also explicitly states that no on-chain funds or DAO assets are at risk. The asset retrieval process is a time-sensitive endeavor, and the longer we wait, the lower the chance of success.
“The entity’s sole function is to pursue a specific set of recovery efforts as outlined herein.” (Section: Scope)
“All legal, financial, and operational responsibility rests entirely with the proposers.” (Section: Clarifications)
Should we be approving this proposal before knowing exactly the exact asset source(s), and what legal strategies will be employed in an effort to retrieve them?
Yes, because the legal entity must be authorized by the community before counsel can file on behalf of the chain. Legal strategy and filings are not disclosed pre-mandate for confidentiality and procedural reasons.
“The contents of this proposal will be submitted to attorneys and included in legal filings and case materials.” (Section: Legal Framework)
Why is a separate legal entity required — couldn’t we contract a law firm directly?
A separate legal entity is required because the blockchain has no legal personality. No law firm can enter into a binding relationship with a decentralized group that lacks recognized status in any jurisdiction. Furthermore, certain court rulings and asset custodian may require in-person appearances which demand a physical individual to be present (usually a representing attorney, and/or one of the proposers). Without a central authority or foundation (like TFL), there is no entity within the Terra Classic ecosystem that can lawfully initiate, sign, or be represented in such legal proceedings on behalf of the community. That is why this new entity must be created - to give the community lawful representation and standing in the real-world legal system.
“The chain is fully decentralized and has no legal entity capable of initiating or receiving legal action.” (Section: Legal Framework)
“This proposal provides the minimal structure necessary to authorize legal representation and protect community interests in court.” (Section: Scope)
Why not use the Community Pool and governance-controlled funding, instead of creating an off-chain fund?
Because some of the assets being recovered are off-chain fiat, not crypto, and cannot be deposited directly into a community wallet due to risk of commingling funds. A legally recognized structure is required to receive and distribute fiat via court-approved mechanisms. A specific off-chain fund is required to house and disburse the money, lest it becomes commingled with potentially toxic TFL assets via LUNC’s Community Pool. The Recovery Fund is a clean slate, and has no legal baggage, which means there’s no chance of assets deposited within it of being at risk.
“This recovery involves a certain percentage of fiat assets, not on-chain tokens, and will be handled entirely off-chain through legal and regulatory channels.” (Section: Recovery Fund Management)
“The Community Pool is not suitable for receiving court-awarded fiat distributions.” (Implied across Scope and Recovery Fund sections)
Would hiring proposers directly or using a spend proposal offer more community oversight and protection?
No. A decentralized blockchain cannot hire or sign contracts, but its community can vote to offer representation which is used to advance the community’s interests in the real world. Legal authority requires formal structure, which this proposal creates. Community oversight is preserved through court supervision, transparent filings, auditable fund flows, public transaction logs, and KYC steward selection.
“Neither proposer will have ownership rights over the funds recovered.” (Section: Clarifications)
“All distributions will occur under regulatory, court, and legal supervision.” (Section: Recovery Fund Management)
Do we trust the individuals proposing this — including Victoria and Rex — to represent the community’s interests responsibly?
That is up to each voter. However, both proposers are long time community members with established reputations. They are acting under their real names, have demonstrated sustained dedication to the Terra Classic Community, are not seeking control of funds, and are personally bearing significant upront financial risk. Remember that they’re working on a finder’s fee agreement - they don’t get paid if they don’t succeed.
“The proposers are fully liable for legal, financial, and regulatory risk — not the community.” (Section: Clarifications)
“If misconduct occurs, consequences will fall on the proposers, who are acting under their real names.” (Section: Transparency & Accountability)
“Both proposers have an established history of public contributions to the Terra Classic ecosystem and are trusted figures known to the community.” (Section: Transparency & Accountability)
Would involving a known, trusted community member as a neutral monitor improve accountability?
KYC’d community stewards will act as independent fund overseers. These individuals will be volunteers from within the community, and their task will be guarding the Recovery Fund assets until disbursement to the Terra Classic community.
“Stewardship will rest with verified, KYC’d members of the community — not the proposers.” (Section: Stewardship & Oversight)
Are concerns raised by legal experts in the community about this proposal valid, and should we be more cautious?
Healthy skepticism is valid, but the proposal addresses major concerns head-on: no chain funds involved, legal boundaries defined, full transparency post-passage, community oversight, and proposer liability.
“No community-held funds, validator authority, or chain-level control is being requested or granted.” (Section: Clarifications)
“We have consulted legal counsel during the preparation of this plan.” (Section: Legal Framework)
Is a 20% finder’s fee reasonable, or should we consider a no-win-no-pay legal model instead?
The 20% finder’s fee reflects the total cost of recovering funds that would otherwise remain inaccessible, including legal, operational, and risk-bearing work over the previous and upcoming months. This is not a retainer or spend request, rather it’s performance-based, and only applies if funds are successfully recovered for the Terra Classic community. A no-win-no-pay agreement with a law firm would be based upon a 30%-40% fee, which is much higher than the proposers’ 20%.
“The proposers will receive 20% of any funds successfully recovered during this endeavor.” (Section: Finder’s Fee)
“No DAO funds or prepayment is being requested. This is a success-based contingency.” (Section: Clarifications)
Will the off-chain Recovery Fund be transparent, secure, and accountable to the community once formed?
Yes. The fund will be staffed and overseen by KYC’d community members who volunteer for the role, managed under legal supervision, and subject to court (regulatory) procedures. Proposers will not control it, nor influence its staffing.
“The Recovery Fund will not be controlled or operated by the proposers.” (Section: Clarifications)
“Stewardship will rest with verified, KYC’d members of the community — not the proposers.” (Section: Stewardship & Oversight)
“All distributions will occur under regulatory, court, and legal supervision.” (Section: Recovery Fund Management)
What happens if recovered funds are taxed, delayed, frozen, or otherwise inaccessible after recovery?
If recovery fails or access is blocked, no disbursements will occur. Any such legal or logistical risks are borne by the proposers.
“The proposers are fully liable for legal, financial, and regulatory risk — not the community.” (Section: Clarifications)
“The 20% fee is success-based and will not apply if no funds are recovered or disbursed.” (Section: Finder’s Fee)
What happens if no KYC community members step forward to help manage or co-sign the fund?
If no stewards come forward, the funds will remain in place until at least 5 such stewards volunteer and satisfy compliance (KYC). The fund cannot and will not default to the proposers.
“If no KYC’d community stewards are available, fund distribution will be paused.” (Section: Stewardship & Oversight)
“The Recovery Fund will not be controlled or operated by the proposers.” (Section: Clarifications)
Why were past recovery opportunities, such as the $4.2 million multisig, rejected — and are the same issues present now?
This proposal does not seek to re-litigate prior efforts, but addresses past concerns directly by providing transparency, legal oversight, proposer liability, and community stewardship. It represents a new, structured approach.
“The proposal reflects months of work to create a responsible legal framework for recovery that protects the community and ensures accountability.” (Section: Transparency & Accountability)
Why can’t the community simply authorize someone to recover the assets instead of forming a new legal entity?
Legal recovery requires recognized standing in court. Without a legal entity, the community has no identity under the law, and no individual can claim to represent it without formal delegation.
“The chain is fully decentralized and has no legal entity capable of initiating or receiving legal action.” (Section: Legal Framework)
“This proposal provides the minimal structure necessary to authorize legal representation and protect community interests in court.” (Section: Scope)
Why aren’t the sources of the assets being pursued disclosed to the community?
The legal process requires confidentiality at this stage. Disclosing specific targets prematurely could compromise recovery efforts or legal standing. Details will be disclosed after legal action begins. Rest assured we will do everything within our power to retrieve as much money for the community as possible, and will never violate the 80/20 split agreement regardless of the final amount… even if it turns out that we end up in the red with our legal bills. Our fiduciary responsibility to the Terra Classic community compels us to seek maximum compensation for it, and handle matters with full transparency. We are thus bound to attempt to retrieve as much money for the community as possible, because they are the beneficiaries of this endeavor. And in order to maximize compensation, certain details need to be held in reserve until such a time they can be shared and won’t negatively impact the retrieval effort.
“Due to confidentiality obligations, we cannot name specific custodians or case details at this time. Full transparency will follow once filings begin.” (Section: Legal Strategy & Timing)
Can the proposal be rescinded, revised, or reversed after it’s passed?
No. The proposal is a fixed mandate. Once passed, it becomes a binding instruction for the proposers and their legal counsel to act, as well as for the Terra Classic community. This clarity is essential to avoid any legal ambiguity, disruption, or procedural risk once attorneys begin formal filings and representation. Altering the mandate mid-process would undermine the integrity of the case and could jeopardize the recovery effort itself. While the proposal itself cannot be revised or revoked, the legal entity it authorizes may still be dissolved — but only under specific outcome-based conditions:
(1) Mandatory dissolution if no viable funds can be recovered. Handled by the proposers.
(2) Optional dissolution if the recovery is successful, and all obligations are fulfilled.
This ensures the legal structure remains strictly tied to its mission, while respecting the finality of the community’s vote.
“The mandate, purpose, and scope are fixed — not open to revision post-vote.” (Section: Clarifications)
Will there be a live discussion (e.g., Twitter Space or voice call) where the community can ask questions directly?
Yes, once we’ve secured the assets and successfully brought them to the community, we will do a celebratory round of live spaces to answer all of your questions about the process!
3 Likes
I appreciate your work and ambition.
I’m not a lawyer but I made my own research that may help you improve the proposal.
The most important results of my research:
• The proposal never fixes a jurisdiction or legal form; it postpones that choice until after community approval.
• Proposers and proposal itself assume that all people need to know that it is possible to create single-purpose entity.
• The text repeatedly promises a “single-purpose” recovery entity, but gives no legal details on how that lock will work.
• Authors state the entity’s mandate is “single-intent and non-transferable,” yet provide no jurisdiction-specific comparison or mechanism.
• Different countries enforce purpose clauses very differently; the proposal offers no answer.
• Because the same two founders may control all voting rights, they could later amend the charter in forms like a Delaware LLC or UK company unless extra safeguards are added.
• In stricter forms (e.g., Swiss or Dutch foundations) regulators or courts must approve purpose changes, making amendments hard.
• Therefore, simply saying “we will write a narrow charter” does not convince sceptics that the lock is reliable everywhere.
To persuade voters, the authors should /could:
• publish a jurisdiction matrix comparing LLCs, guarantee companies, Dutch stichtings, Swiss foundations, etc.
• circulate a draft charter showing the objects clause, prohibited actions, and a sunset/dissolution trigger.
• Embed an on-chain veto (e.g., a Guardian share held by the Terra Classic DAO) so amendments need community approval.
• Appoint an independent “protector” director with power to block off-purpose decisions.
• Release a brief legal memo from law firm confirming the chosen form can be legally purpose-locked.
• Publish a milestone calendar (incorporation, asset freeze, deposit, dissolution) with reporting deadlines.
• Spell out automatic dissolution once funds are recovered so the vehicle cannot morph into something else.
Implementing these items converts the plan from “trust us” into a concrete, externally enforceable structure, addressing doubts about future mission creep.
///
PS. I have forwarded the links to my ChatGPT o3 research to @Pholuna . I am not ashamed or regret a single second of analyzing this topic using state of the art AI that is better than any of us in 99% of aspects of our lives, and which is also very effective (at least in my experience) at basic legal analysis. Ultimately, it doesn’t matter how the analysis was created or the knowledge was acquired. What matters is whether the analysis is valid.
PS2. Terra Classic should order full legal opinion on paper from proven law firm about risks of creating this legal entity. That is what I am saying from the start.
2 Likes
“Terra Classic should order full legal opinion on paper from proven law firm about risks of creating this legal entity. That is what I am saying from the start.”
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knowing our politics, either it will never happen or it will take months until that happens. thus I don’t see this as a practicable suggestion in this time-sensitive situation.
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this is why we need a legal entity in the first place to be able to interact with the traditional world (chicken & egg). once we take over that entity, we can order whatever legal opinions we want/need.
2 Likes
Hi again Trev!
Let me try and address your points…
Our proposal is not a draft or a negotiation - it’s a fixed mandate. What you’re looking at here is essentially the terms & conditions of the agreement. I think we’ve mentioned this elsewhere, but it bears repeating: this governance proposal will be a part of the proceedings, and will be featured alongside other legal documents. As such, it is binding. It has to be. And it specifies exactly what we’ll be doing. It’s basically a step-by-step outline, only lacking the final seal of community approval needed for us to move forward.
No one currently has legal standing to represent the Terra Classic community. That authority can only be granted through governance. Without a vote, any legal action taken on behalf of Terra Classic stakeholders would be illegitimate. This process of seeking authorization before filing legal briefs may feel reversed compared to traditional business, but that doesn’t make it any less legitimate or binding. In centralized systems, legal documents come first. In decentralized systems, legal authority comes after governance approval - there’s no valid legal representation without it.
We consulted professional counsel while drafting this proposal. However, no firm can create binding documents on behalf of an entity that doesn’t yet exist. Authority must be granted first, then formal documents follow. I’d like to remind you (and anyone reading this) that all legal, financial, and operational responsibility lies entirely with us, the proposers. We are forming the entity, entering into contracts, and bearing all potential liabilities and financial risks. If the plan fails, misfires, or encounters compliance issues, we’re the ones held accountable - not the community. As such, the least the community can do is entrust us to represent them to the best of our ability.
It’s not like we’ll suddenly do a 180 turn and rescind the terms & conditions in the prop here. We can’t even if we wanted to, simply because this proposal will be baked into a binding legal agreement. Honouring the proposal’s terms & conditions is a prerequisite for going forward, and it’s not optional - it’s mandatory! There will be no post-vote editing, reinterpretation, or expansion. Any deviation from the proposal would be dishonest and legally indefensible. And the irrevocability clause some people have had issue with is only there to ensure the community doesn’t derail things halfway through the legal proceedings, it doesn’t empower us to do anything outside of that. The chain itself remains separate from our retrieval effort, we have no mandate tied to it, because we’ll be representing the community, not the blockchain.
So I think there’s really no need to worry about LUNC being counter-sued or whatever else a small handful of vocal people have been stressing over. It’s not going to happen.
To put things into perspective, here’s a timeline of events once this proposal passes:
(1) A fully compliant legal entity will be formed.
(2) Execution will follow the proposal exactly as written, with no deviation.
(3) The full text of the proposal will be given to legal counsel, and included in official filings.
(4) This forms the binding mandate for the entity’s operation, and prevents it from being changed ad hoc.
(5) Periodic and fully transparent updates will be shared with the community at monthly intervals, or upon major milestones.
It’s understandable there’s some scepticism attached to matters of this complexity, but I’d like to remind everyone that as the proposers, our IRL credentials will be linked to these proceedings.
We’ll also keep the community up to date as things get underway, so everyone can follow along and hopefully cheer us on from the sidelines!
2 Likes
We’ve made 3 addendums and have added them to the proposal, gathered from community feedback:
1) We’ve specified the exact conditions required for validators to become eligible to volunteer as staff members of the Recovery Fund.
2) We’ve committed to sharing public progress reports at least once per month, or for each major milestone… whichever occurs more frequently.
3) We’ve expanded the “irrevocability” section, specifying it exists only to ensure the entity retains legal standing throughout the proceedings.
Thank you to all community members who sent us questions, ideas, and suggestions!
Please refer to the Q&A + FAQ, all your questions are covered there.
I’ve reviewed the Q&A / FAQ again, but it doesn’t address my specific concerns. You didn’t respond to my suggestions either.
Regardless - Thank you for the response / pointer.
Opposition to Proposal: Formation of Legal Entity for Off-Chain Asset Retrieval
1. Simplified Overview
While the proposal seeks to recover $1,500,000 in off-chain assets through a legal entity, I oppose it. The approach is flawed, concentrating authority in a centralized body while introducing governance risks. The recent guilty plea by Do Kwon to two U.S. federal charges (conspiracy to defraud and wire fraud, August 12, 2025) does not strengthen the proposal’s legitimacy—it complicates it. Legal proceedings remain ongoing, sentencing is not yet delivered, and appeals may still follow. Anchoring our governance to this shifting legal ground is unwise.
2. Introduction
Yes, the Terra Classic community needs funding. But pursuing it through a centralized legal entity creates new liabilities and undermines decentralization. The guilty plea complicates, rather than clarifies, asset claims. Funds potentially linked to Terraform Labs may be frozen, subject to restitution orders, or contested by governments. Entering into legal proceedings now risks entangling the community in outcomes we cannot control.
3. Executive Summary & Course of Action
Granting irrevocable authority to a legal entity outside of governance is dangerous. The exclusion of validators who vote NO or NO WITH VETO from fund oversight is anti-democratic and violates governance neutrality. With Kwon’s plea, regulators may assert stronger claims over related funds, leaving the Terra Classic Recovery Fund vulnerable to seizure or redistribution regardless of community votes. This undermines the “zero risk” framing entirely.
4. Elaboration
i) Struggle of the Terra Classic Community
The chain’s struggles are real, but resilience has come from decentralization. Centralizing recovery under a legal body at this moment exposes us to heightened regulatory risks—risks worsened by the guilty plea, which signals increased scrutiny.
ii) Off-Chain Funds
Off-chain recovery is now even more uncertain. Custodians and regulators may treat assets as subject to forfeiture or restitution to victims of fraud. A legal entity representing Terra Classic may lack standing against government claims.
iii) Claimed Benefits
The benefits are overstated. A guilty plea increases the likelihood of prolonged litigation, asset freezes, or government seizure. Even if funds exist, the community may never access them. Meanwhile, we risk giving authority to an entity that cannot deliver results.
5. Difficulties & Legal Obstacles
The plea guarantees heavier institutional resistance. Courts and custodians are now far more likely to recognize U.S. restitution claims before community claims. This reduces the realistic probability of success. In effect, the community may anchor governance to a long, costly legal process with no guaranteed benefit.
6. Guardrails & Guarantees
The legal entity is made irrevocable under the proposal. This is unacceptable. Governance must remain sovereign, especially in light of fluid legal developments. If regulators change course after sentencing, the community must retain the option to adapt.
7. Conclusion & Call to Action
I oppose this proposal because it:
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Concentrates authority in a centralized entity, undermining decentralization.
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Excludes dissenting validators from oversight, harming governance legitimacy.
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Relies on uncertain legal claims, now weakened further by Do Kwon’s guilty plea.
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Ignores the high likelihood that regulators will prioritize victims and governments over community claims.
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Distracts from organic, on-chain recovery strategies we can control.
The guilty plea does not make this proposal safer. It makes it riskier. For these reasons, I must vote NO.