Skip to main content

The Terra Luna scandal - Investors face a total loss

 


The cryptocurrency market over the past few days has been anything but bullish. Almost all cryptocurrencies recorded losses of more than ten percent. The market has recovered somewhat since Thursday afternoon, but Bitcoin continues to struggle at the $30,000 level.


However, there was no happy ending for the cryptocurrency Terra Luna. I would argue that last week's scandal is among the biggest in cryptocurrency history, leaving investors with extreme losses.


Terra had a stablecoin called UST that is algorithmically coupled and should therefore hold the $1 level. Other stablecoins like USDT (Tether) are physically backed by cash, which derives some degree of stability. 


This week it was time. The UST house of cards collapsed. Experts have been criticizing the use of a pseudo coupling for months. Investors who have been staking the Terra stablecoin UST have seen their saved (supposedly safe) money plummet by nearly 90 percent.


You have to imagine that first. We're not talking about a cryptocurrency that's volatile in a crash. No, we're talking about a “stablecoin” that should always be tied to $1. Investors had great confidence in UST for months and through the interest that investors got, they started to invest more and more capital. Unfortunately you read on some forums that people have mortgaged their house in UST.


But that is not enough. Terra's cryptocurrency -Luna- has seen losses of 99 percent for days, falling to a fraction of a cent from $110 in April. But why was Luna so affected by the UST crash? On the one hand, the trust of the community crumbled and on the other hand, an action follows that cannot be surpassed in terms of audacity.


Not only had the Terra team halted the “decentralized” blockchain for the past week, they also printed billions of new LUNA coins to raise fresh capital to “save” the Terra UST. The balance of Luna Coins before the fiasco and in the days after can be seen below.



The Terra Team nearly "destroyed" Luna due to the "rescue operation". This extreme surplus of coins even led to stock exchanges restricting trading with Luna or even delisting it completely to protect investors. 


Terra founder speaks up

Do Kwon, creator of defunct cryptocurrencies TerraUSD and LUNA, is now the subject of criticism and investigation after his venture's failure sparked a major market-wide disaster this week.


The founder is known for his active social media presence, yet he's been uncharacteristically quiet in recent days as the network heads for disaster.


Kwon stated that he has spent the last few days calling various community members to let them know that the tokens have lost all value. By his own admission, Do Kwon is devastated, he said:


"I'm heartbroken by the pain my innovation has caused you all," he said, adding that he's spent much of his time on the phone with people who are "devastated that UST has been broken."


Kwon made the comments hours after he suggested on a Terra discussion board that the network be restarted by distributing 1 billion tokens to affected holders and users.


The simultaneous collapse of the algorithmic stablecoins UST and LUNA resulted in significant losses for market participants. TerraUSD traded as low as 15 cents amid frenzied selling. This triggered a broader crash that took the largest cryptocurrency, Bitcoin, to its lowest levels since 2020.



Burglary & Police Protection

On Friday, MoneyToday reported that an unknown person broke into the apartment complex where Do Kwon's wife is staying. After Kwon's wife answered the door, the person reportedly asked who the company's founder was before leaving the scene. After the burglary, authorities in Seoul's Seongdong-gu district informed Forkast that Kwon's wife was immediately placed under security protection.


How is it going now?

That is probably the question that occupies every Terra investor. While Do Kwon has discussed some “proposed fixes” via Twitter, actions so far, such as printing billions of coins, have already turned out to be a dead end. It is unlikely that Luna can recover after this scandal. We look forward to further developments and will report as soon as there are any new developments.

My Top Picks
Honeygain - Passive earner that pays in BTC or PayPal
MandalaExchange -The Best no KYC crypto Exchange! 
BetFury - Play And Earn BFG for daily Bitcoin and ETH dividends!
Pipeflare - Faucet that pays in ZCash and Matic, Games pay in DAI
Womplay - Mobile dApp gaming platform that rewards in EOS and Bitcoin
Cointiply - The #1 Crypto Earning Site
Torum - Join the latest Social Network and earn TRM for Free! 
LiteCoinPay - The #1 FaucetPay earner for Litecoin 
LBRY/Odysee - YouTube Alternative that lets you earn Money by viewing videos!
FaucetPay - The #1 Microwallet Platform
FREEBTC - The #1 FaucetPay earner for Satoshi's
FaucetCrypto - An earning/faucet site that pays out instantly
FireFaucet - An earning site that pays better for some than Cointiply
DogeFaucet - Dogecoin Faucet
xFaucet - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BCH, BNB, ZEC, FEY - Claim every 5 minutes
Konstantinova - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BNB, ZEC, USDT, FEY, 25 Claims Daily

Comments

Post a Comment

Popular posts from this blog

From offchain to offchain: Statechains meets Lightning

  Without a doubt, the most significant off-chain Bitcoin solution is the Lightning network. But in its wake, the statechain has emerged as an intriguing replacement. There is currently a proposal to link the two offchain networks. From an ocean, for example, you can see sunbeams glistening in the water, waves rippling, and possibly a jellyfish drifting toward the light. But you only see a small portion of it. The distance from the sea's surface to its bottom is hundreds of meters. It has dozens of different fish species swimming in it, crabs and starfish crawling on the bottom, shells clinging to rocks, and sea plants climbing up. A completely new world starts where your gaze diverges. You can picture a blockchain like Bitcoin, just like the sea. What you see on the outside is only a small portion of what is actually there; the set of UTXOs (coins) and transaction history that full nodes store are just the beginning of a much larger world. It's the plan, at least. With Bitcoin
Post a Comment
Read more

MSP Recovery and Tokenology aim to optimize healthcare with the help of Polygon

  MSP Recovery LLC, a Miami, US-based healthcare provider with an estimated enterprise value of $32.6 billion, is partnering with Web3 company Tokenology to jointly launch a new blockchain platform called Lifechain. Lifechain wants to leverage the verifiable and transparent nature of blockchain technology to aggregate medical care claims, medical expense reports and patient data and streamline their processing. For this purpose, MSP Recovery launched its own LifeWallet in January, which already has 1 million users. In addition to the wallet and blockchain platform, an associated crypto token called LifeCoin is also used. The press release explains that the primary purpose of the system is to enable secondary healthcare providers to more effectively bill health insurance companies for their costs. “The number of medical claims tokenized going forward will surpass $50 million per day by 2024. For this we need scalability, security and sustainability, which we have only found with Polygon
Post a Comment
Read more

Phishing attack on popular crypto sites tries to empty wallets

  Several major crypto sites such as Etherscan, CoinGecko, DeFi Pulse, and others report malicious pop-ups scammers use to try to trick users into connecting their MetaMask wallets. The phishing attack came from a domain displaying the Bored Ape Yacht Club (BAYC) logo. "We are investigating the root cause of this attack to fix the threat as soon as possible," CoinGecko founder Bobby Ong tweeted. The phishing attack appears to have been triggered by a malicious ad script from Coinzilla, a crypto ad network, according to CoinGecko. Etherscan also advises its users not to confirm any transactions that may appear on the website. The attackers attempted to use the hype around the “bored monkeys” non-fungible tokens (NFT) to gain access to the cryptocurrencies of unsuspecting website visitors. Although the websites affected by the scam attempt have reacted in the last few hours and deactivated the advertising pop-up, it is still recommended not to connect your MetaMask wallet to ne
Post a Comment
Read more