Luna Crypto - Its Collapse, Missing Founder And Everything In Between
With approximately $60 billion gone as Luna crypto collapsed, it’s impossible for the world of cryptocurrency not to feel the impact.
To further complicate matters, one of its co-founders, the South Korean computer scientist and cryptocurrency developer Do Kwon, is currently wanted by the authorities.
Along with TerraUSD, Terraform Labs, headquartered in Singapore, held the crypto coin, Luna.
According to Forbes, it took only four years for Kwon and his Terra network to establish a reputable status in the crypto world. However, the fame didn’t last.
At the time of this writing, the collapse of the Luna crypto network - a lost worth a staggering $60 billion - remains to be the biggest crypto crash so far.
COPYRIGHT_WI: Published on https://washingtonindependent.com/luna-crypto/ by Elyse Woods on 2022-10-06T08:09:16.645Z
What happened to Luna? Also, is Do Kwon in hiding?
To make things clear, Forbes pointed out that the incident concerning Luna crypto involves two coins, namely, TerraUSD (Terra U.S. Dollar or UST) and Luna (stylized as LUNA).
Do Kwon and investor and e-commerce expert Daniel Shin co-founded the fintech company Terraform Labs in 2018. It created the blockchain network called Terra.
It’s just like the Bitcoin network and the Ethereum network.
TerraUSD (UST) and Luna both belong to the Terra network. Terra created the Luna coins and TerraUSD (UST) serves as its “algorithmic stablecoin.”
Terraform Labs launched TerraUSD (UST) in 2018; Luna, in 2019.
Tracing its humble beginnings, back in 2021, a Luna coin was only worth less than a dollar. Eventually, its value soared and just within a year, several crypto investors earned millions from it.
As the Luna crypto gained prominence, so did Do Kwon (over a million Twitter followers).
The media would report about ordinary people becoming rich because of its success. Consequently, some crypto investors placed Kwon on a high pedestal, earning him a “cult hero status,” as Forbes put it.
After the Luna crypto collapsed, per CoinMarketCap, its market capitalization as of August 2021 was $6 billion.
In a nutshell, according to Forbes, TerraUSD (UST) encountered a problem. Since Luna is connected to it, the problem led to the Luna crypto crash.
On May 7, 2022, TerraUSD (UST) was taken - “unstaked” is the crypto term for it - from Anchor Protocol (ANC), which is built on the Terra blockchain.
The estimated total value of the TerraUSD (UST) taken was more than $2 billion. After the unstaking, hundreds of millions of dollars’ worth of TerraUSD (UST) were liquidated.
There were two arguments presented as to why the unstaking was done, which ultimately led to the Luna crypto crash:
- interest rates continued to increase
- the Terra blockchain got attacked
Then these two happened:
The huge sell-offs brought down the price of UST to $0.91, from $1. As a result, traders started to change 90 cents worth of UST for $1 of Luna.- Forbes
Panic ensued and investors started selling TerraUSD (UST). As more TerraUSD (UST) were sold, more Luna tokens were minted. As a result, the latter’s circulation rose.
Then came the collapse of the Luna crypto. Crypto exchanges reacted by removing TerraUSD (UST) and Luna from their list.
In any kind of cryptocurrency crash, more so for such a massive scale like the Luna crypto crash, it would only be natural to look for the leader or president/CEO.
Channel News Asia reported that the Seoul Southern District Prosecutors’ Office already contacted the Interpol (the International Criminal Police Organization from France) for assistance.
Kwon is now under Interpol’s “red notice.” If he happens to be in any of the organization’s 195 member states, the police force in any of those countries can arrest him.
He and five more Terraform Labs employees will undergo trial in a South Korean court for fraud and other charges in connection to the Luna crypto crash.
Like an individual who got terribly ill, according to Capital.com, Luna is now on its way to recovery.
Do Kwon proposed the creation of Terra 2.0. The crypto community approved of this new blockchain in May 2022.
The price of a Luna coin before its collapse was $80, according to Analytics Insight.
According to Coin Culture, the market cap of Luna must first reach $7 trillion before it could reach $1.
Expectedly, the collapse of Luna crypto added - perhaps renewed? - the fear of investing in digital currencies.
As if investing in general is not already risky, not to mention how volatile cryptocurrencies are, this incident only triggered more speculations.
Still, the Luna crypto crash won’t entirely prevent people from investing in crypto, but hopefully would make them wiser investors.