Terra’s creator came forward and tried to justify himself after the project collapsed. What did he say?
The founder of the infamous Terra project Do Kwon made a new public statement the day before: he noted that there is a difference between fraud and the unforeseen collapse of the project. Kwon expressed regrets to investors who lost millions of dollars after the catastrophic fall of his LUNA token and TerraUSD (UST) stabelcoin. In addition, he added that he himself lost almost his entire fortune after the incident. We tell you more about what’s going on.
Recall that almost a month ago, the TerraUSD algorithmic stablecoin critically deviated from the $1 price, causing an uncontrollable drop in the value of the LUNA token, which is closely tied to the Terra ecosystem. Do Kwon’s team made futile attempts to save the situation by liquidating a significant portion of its reserves in various cryptocurrencies. However, not only did this not help, but it also led to a serious drop in the price of Bitcoin.
As a result, the original Terra token collapsed by a hundred percent: today it trades at $0.00005897, although it peaked at $119 relatively recently on April fifth, 2022. The chart of the cryptocurrency’s price looks like this.
Terra LUNA Classic rate chart for the last 90 days
The situation with the Terra USD (UST) stabelcoin is no better: it trades at 1 cent, though it should be worth a hundred times more.
Terra USD (UST) rate for the last 90 days
But that’s not all: Terra’s developers have created a new version of the blockchain without the stabelcoin. After launching, the new cryptocurrency LUNA jumped to a record $18.87. Today, its exchange rate stands at $1.93, almost 90 per cent below the high.
Terra LUNA exchange rate chart over the past 30 days
So investors in the LUNA ecosystem – new ones included – have lost a lot of money on their investments. With that in mind, it’s not surprising that Do Kwon’s comments have caused nothing but annoyance.
What happened to Terra
Kwon’s words sound more like attempts to justify himself after his reputation in the cryptocurrency community was destroyed. Here’s one of his quotes from an interview published by news outlet Decrypt.
I made a confident bet on UST and claimed it because I believed in the resilience of the project and its value. I have lost a lot since then, but my actions are 100 per cent in line with what I said. There is a difference between failure and purposeful fraud.
Note that in doing so, the Terra team may have been aware of the prospect of the project collapsing. As it became known in the first half of June, an investigation into the incident made it clear that a 20 per cent annual return for UST steaming was something unrealistic, with representatives of the relevant Anchor platform warning Do Kwon about it. However, he insisted on this level, which ended up being one of the main reasons for investors to get in touch with the Luna ecosystem.
Terra creator Do Kwon
Experts estimate that Kwon’s cryptocurrency assets made him a billionaire when LUNA was trading around $100 earlier this year. According to Kwon, losing most of his fortune “doesn’t bother” him as he leads a “pretty frugal lifestyle”.
LUNA’s collapse
Do Kwon himself ended up in the crosshairs of law enforcement agencies in South Korea, the country where his company Terraform Labs is based. By the way, the Terra creator’s statements about his own words hardly have anything to do with reality, because we previously found out that Kwon was too dismissive to criticism of the project and denied any predictions of its collapse.
In recent news of law enforcement activity in South Korea, we can recall the restriction on Terra employees - and former ones among them - from leaving the country. This came to light on Monday thanks to a tweet by Daniel Hong. Here's the image he shared.
Details of the ban on Terra employees flying out of South Korea
Kwon’s team has since “relaunched” Terra’s blockchain by issuing a new token called LUNA, while the old token was named Luna Classic. Unfortunately, any apology from the former billionaire will not compensate the affected investors. It is therefore unlikely that his words should be taken as anything more than a consequence of “bad karma”.
Lawyers who represent affected investors in court with Terra
We believe that Do Kwon can say whatever he wants, but it will not change the essence. Investors have lost a lot of money on both the original LUNC token and the UST "stack" as well as the new version of the coin. It will therefore annoy investors for a long time to come. Kwon probably won't be able to regain confidence, so his projects will continue to collapse.
What do you think about this? Share your opinion in our millionaire cryptochat. There we discuss other important details of what is happening in the world of decentralized assets.
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