Terra Group Called In After TerraUSD Tanks
It feels like nothing good can happen to the Terra crew right now. South Korean prosecutors have recently contacted Terraform Labs in an effort to learn more about the demise of TerraUSD (UST), the company’s stablecoin.
Local media reports that the Seoul Southern District Prosecutor’s Office has contacted all Terraform Labs employees in an effort to learn more about the circumstances surrounding the company’s untimely demise. Those employees who have been with Terra since 2019 are said to have given testimony. The majority of the staff was aware of the fault in Terra’s self-correcting mechanism and had alerted Do Kwon of the potential for collapse, as one unmanned worker revealed.
South Korean prosecutors are utilising this info to investigate if Kwon and other Terra executives had been conscious of the flawed mechanism and the achievable deficiencies which, in accordance to the report, may result in expenses of fraud and value manipulation. The government is looking into whether or not local exchanges followed the proper itemising evaluate processes before adding LUNA and UST.
Terra’s token mechanism is receiving a lot of attention from South Korean regulators since UST lacked the protections afforded by fiat currency and other collateral in the event of massive liquidations. While Terra had rapid success in 2021 and early 2022, there were multiple warnings about the possibility of a UST depeg if the protocol was ever put under significant advertising pressure. And it did; de-pegging of UST began on May 7 after massive sell-offs and UST exchanges for other stablecoins.
The impending collapse of Terra caused a slaughter in the crypto market as a whole. The collapse of UST and LUNA reportedly impacted over 300,000 South Korean merchants, many of whom have filed lawsuits against Terraform Labs and Do Kwon. After trying to knock on Kwon’s door, one of the many impacted merchants was taken into custody. A few days after the attack, Kwon was called to testify at a parliamentary hearing in South Korea about the company’s unexpected collapse.
The discovery comes three days after Coincentral disclosed the relaunch of the Terra network and its new token, LUNA 2.0. —which was airdropped to concerned LUNA Traditional (LUNC) holders. However, the brand new LUNA coin was pumped by 30% and dumped by 70% across major platforms in the first few hours of trading.
People had to sell in order to recoup some of their losses.
As a result of the Luna collapse, many people fell behind on their bills and needed to capitalise on the release of Luna 2.0 in case Terra 2.0 also failed to deliver.
Luna has a poor level of investor confidence. Absolutely no one wants to be a loser twice.
Several major cryptocurrency exchanges, like as FTX and Binance, now facilitate LUNA trading despite the upheaval, and other decentralised protocols have helped Terra reconstruct its ecosystem. Polygon, one of the most popular Ethereum sidechains, has announced the introduction of a “uncapped multi-million dollar fund” to facilitate the transition of projects from the defunct Terra platform to its own blockchain.
Twitter users who invest in cryptocurrencies are divided on whether or not they believe Terraform Labs will succeed in reviving the Terra network. According to data from CoinGecko, as of this writing, LUNA is trading at $9.12, having recovered around 50% of its losses.
