– Terra Ecosystem collapsed in May 2022, wiping $40 billion.
– Do Kwon is now charged by US financial regulators for crypto and securities con.
2022 was dotted with spectacular crypto events like the Terra Ecosystem collapse, FTX-saga, Three Arrows Capital implosion and numerous bankruptcies.The whole crypto industry was afflicted with a harsh crypto winter.Regulators have been charging the culprits, and recently US regulators have charged Do Kwon with fraud.
The SEC vs.Terraform Labs
Singapore-based cryptocurrency company Terraform Labs boss, Do the United States financial regulators charge Kwon with “orchestrating a multi-billion dollar crypto assets and securities fraud.” The company created Terra Luna and Terra USD tokens, which dramatically collapsed last year, washing away more than $40 billion.
Gary Gensler, US SEC Chair, said in a statement:
“We allege that Terraform and Do Kwon failed to provide the public with full, fair and truthful disclosure as required for a host of crypto asset securities, most notable for LUNA and Terra USD.”
Further alleging them of committing fraud by persisting false and ambiguous statements, building trust, and almost pulling the rug from beneath their feet, causing investors to lose millions.Per SEC, Mr.Kwon and his company heaved billions of dollars from innocent investors and sold them “an interconnected suite of crypto assets securities” while many transactions went unregistered.
The SEC also alleged multiple claims by Do
Kwon and Terraform about the soon-to-be increase in value and deception into Terra USD stability.In reality, both the token and LUNA tumbled to zero in May 2022.
Terra ecosystem cost the investors of TerraUSD and LUNA an estimated loss of $42 billion, per analytic firm Elliptic.This incident triggered a domino effect with a major sell-off in Bitcoin, Ethereum and Tether.
This effect continued with major crypto houses packing their bags.
South Korean national Do Kwon said at the time that he was sad that his invention caused suffering to so many people.Local authorities issued an arrest warrant for Mr.Kwon, believing he was hiding in Serbia.However, he denied any hiding rumors and tweeted that they are available for communication with any government agency wanting to contact them.
Terra Ecosystem Collapse – Refreshed
It was a blockchain ecosystem comprising a stablecoin token TerraUSD (USDT), and a token called Luna.
In pairs, they formed an algorithmic stablecoin to maintain 1 USD=1 TerraUSD (USDT); this algorithmic pegging system failed.In May 2022, Luna was at $120 and fell to zero in a few days.Costing UST/LUNA $50 Billion market cap and $400 billion in losses.
Although the exact reason for its collapse is yet to surface, speculations are that a rate cut from Anchor from the interest of nearly 20% would have to be paid for crypto deposits on May 2, 2022.
In a similar timeframe, nearly $250 million in transactions were seen from Curve Finance.
Terra Resurrection – Terra 2.0
In May 2022, Do Kwon launched Terra 2.0, a better version of Terra, dropping any links to the algorithmic stablecoin.This step was a hard fork of the original Terra blockchain called Terra Classics, while LUNA will now be named Luna Classic (LUNC)
Terraform Lab’s Do Kwon charged with Fraud by US Regulators- February 17, 2023 3:05 pm EST
Chainalysis Report State 2022 as A Year of Crypto Thefts- February 17, 2023 2:15 pm EST
CCL Stock Sunk Over 4% in 24 hours, Will it Survive the Fall?- February 17, 2023 1:17 pm EST.