Shortly after Terra collapsed, the project was relaunched on a new network, with no algorithmic Stablecoin already in place. However, the update did not really save the ecosystem, and it clearly lost user confidence.

As of today, the updated LUNA is 86.7 percent below its high. And its chart since the end of May looks like this.

LUNA’s updated coin price chart

What’s going on with the maker of Terra

Recall that Terraform Labs was the developer of the Terra project, whose ecosystem almost completely devalued this spring. The main reason was the loss of parity of the native algorithmic stabelcoin TerraClassicUSD (UST) and the rash actions of the project team to save it.


That is, the peculiarity of UST was that due to the algorithm, the rate of "stabelcoin" should be equal to 1 dollar. However, in the end the value of the asset became detached from the US currency, after which the project management began to massively print LUNA token, which was linked to UST with a certain burning mechanism. The developers' failure followed on all fronts: it did not succeed in restoring UST parity with the dollar, and due to the incredible increase in LUNA supply, its exchange rate lost nearly 100 per cent of its own price.

Well, investors who were associated with this ecosystem have lost a huge amount of money. According to various sources, we are talking about 40-60 billion dollars, which will not be recovered. By the way, there were plenty of people willing to interact with UST, because the project yielded 20 percent per annum in steaking, which seemed like a very good offer, taking into account the stability of the UST exchange rate at that time. However, it was this nuance that led to the collapse of the project and the loss of money.

Terra’s collapse resulted in tens of billions of dollars in losses, as well as the bankruptcy of some major cryptocurrency companies. Unsurprisingly, law enforcement is using all measures, including freezing his funds, in an effort to find Do Kwon. However, he himself denies the news. Here is Kwon’s quote from his Twitter post, cited by Decrypt.

I don’t understand the motivation for spreading this false information – is it an attempt to gloat? But to what end? Again, I don’t even use Kucoin and OKX, I have no time to trade, no funds have been frozen. I don’t know whose funds they froze, but I’m happy for them, I hope they use them for good.

Terra founder Do Kwon

Note that Kwon's position sounds very weak. In fact, he simply denies any allegations against him, but makes no attempt to dispute them. On top of that, the businessman is clearly hiding from justice, as he is aware of prosecutors' desire to make him accountable for what he has done.

Incidentally, Twitter user FatMan agrees with this position. He was previously a supporter of the Terra project, but has since collapsed become a vocal critic. Here is his quote-reaction to Kwon’s recent statements.

SEC: you must be breaking the law, please attend our hearing.
Do Kwon: no I’m not, you’re lying.
Korean government: you have committed a crime, here is a warrant for your arrest.
Do Kwon: No, you’re making these accusations up.
Hmm? Maybe someday you’ll realize that you’re the source of the problem.



According to Decrypt’s sources, OKX and KuCoin exchanges are mentioned for a reason – last month there were rumours that these companies had collaborated with the authorities to freeze 3,313 BTC worth approximately $66 million. However, Kwon and a non-profit organisation to support the ecosystem called Luna Foundation Guard refuted those reports.

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A week ago, Kwon tweeted that he had not taken funds belonging to his company and no TerraForm Labs or Luna Foundation Guard funds had been frozen. Meanwhile, Interpol has issued a red notice for his arrest – meaning that law enforcement agencies in countries where the international organisation operates must assist in the search and extradition of Do Kwon to South Korea.

It was revealed today that the Seoul South District Prosecutor’s Office has arrested Yoo Mo, a representative of Terraform Labs. He is believed to be a key associate of Terra founder Do Kwon.

Terra founder Do Kwon


We think the situation with Terra is dire. Obviously, most investors won't get their money back, and the previous amount of compensation has been ridiculous. That said, Kwon is clearly in no hurry to answer for the extent of the disaster, yet denies any allegations. Apparently, Interpol and prosecutors will have the last word in the end.

Follow the situation on our millionaire cryptochat. There we discuss other important developments affecting the situation in the coin industry.

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