- Terra's LUNA price bearish run continues as crypto market bloodbath puts another stablecoin peg under pressure.
- Do Kwon, the Terraform Labs CEO, cashed out $2.7 billion from Terra before the collapse of UST and LUNA.
- Kwon is facing an investigation from the US SEC and Seoul Metropolitan Police.
- FatMan, a whistleblower, argues that Kwon was able to succeed through the help of borrowing protocol Degenbox.
UPDATE: LUNA price has avoided making a new all-time low on Tuesday, as the mid-$2.30 levels have acted as support above the bottom hit last Thursday at $2.10. LUNA 2.0, like most of the cryptocurrency markets, has failed to create higher highs, which makes the current consolidation likely only a breather for the bears. The revived Terraform Labs coin has been on a regular downtrend since its price collapsed right after CEO Do Kwon's revival plan was launched on May 29. The immediate resistance for the LUNA bulls to beat and create somewhat of a relief rally is located at $2.70, which looks optimistic only considering the legal trouble agenda Kwon and Terraform Labs are facing – the last element of which is a lawsuit slamming Binance.us for falsely advertising UST as a fiat-backed asset.
BREAKING: Korea just released the bombshell revelation that the wallet behind the $UST depegging is actually owned by Terraform Labs (The creator of $UST, $LUNA, $LUNAC)
— Mr. Whale (@WhaleChart) June 14, 2022
PRIOR UPDATE: Terra's LUNA price is yet succumbing to another crypto sell-off wave on Monday. LUNA 2.0 price is trading around $2.40 at the time of this update on the European morning (9.10 GMT), having fallen below $2.50 for the first time since a brief dip last Thursday. Back then, the Terraform Labs cryptocurrency managed to quickly recover levels close to $3, where it managed to stay for the most part of the weekend despite the huge bloodbath seen on most major cryptos. In the past 24 hours, most cryptos are down between 10% and 20%, but Terra's LUNA price had managed to stay somewhat afloat in the same period and even enjoyed a quick 30% spike to $3.4 on Sunday afternoon. Price action has again turned in favor of Terra bears on Monday as another stablecoin (Tron's USDD) is under pressure and at risk of de-pegging from the US dollar. If the LUNA 2.0 all-time low $2.15 support is broken, it is difficult to see an actual bottom for Do Kwon's "revived" cryptocurrency.
JUST IN: 700 million $USDC has been injected into the Tron DAO reserve to defend the $USDD peg.
— Watcher.Guru (@WatcherGuru) June 13, 2022
Following the crash of the Terra ecosystem, controversies surrounding Do Kwon have surfaced. Kwon had cashed out funds consistently from Terra before the collapse of sister tokens LUNC (previously LUNA) and UST.
Kwon cashed out billions from Terra before its collapse
The depeg of TerraUSD (UST) and the collapse of Terra's LUNA wiped out billions from the tokens' market value. Controversies surrounding the crash started emerging, and the SEC discovered that Kwon was cashing out nearly $80 million from Terraform Labs every month before the project's collapse.
Kwon allegedly pulled out $2.7 billion from the Terra network before the crash. The allegations against the CEO imply that Kwon siphoned funds off the project, aware that UST could depeg, the entire sister token ecosystem of LUNC (previously LUNA), and UST could implode.
The whistleblower from the Terra community forum, FatMan Terra, has made allegations against Kwon, who is facing investigations from the US Securities and Exchange Commission (SEC) and the Seoul Metropolitan Police.
FatMan revealed that Kwon pulled $80 million from Terra 33 times; a total of $2.7 billion was siphoned off the project in a few months through Degenbox.
How Kwon dumped UST for $2.7 billion
FatMan argues that paper billionaires can find it hard to cash out their holdings; therefore, dumping LUNA or UST for USD could trigger a crash. Therefore, Kwon used to burn/mint to convert it to UST, use Abracadabra's Degenbox, and loop stablecoin buys.
Kwon staked collateral to buy UST, put it in Achor, used his UST to borrow more UST, and put more in Anchor again. The liquidity increased, and SPELL picked up the tab to provide deeper exit liquidity to the UST pair.
According to FatMan, several Terra influencers shilled this strategy to their followers, and thousands of retail users flooded Degenbox for high yields. While this depleted yield reserve quickly, it threatened Anchor's long-term sustainability, and Kwon didn't care about it.
FatMan argues Kwon cashed out $2.7 billion through the MIM/UST pool without moving the peg. Kwon drummed up liquidity from retail investors through Degenbox and SPELL.
Analysts believe LUNA 2.0 has 100% bullish potential
FXStreet analysts have evaluated the LUNA 2.0 price trend and noted that the Terra token had hit its bottom and it has bullish potential. For more information, watch this video:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections
MAGA trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption.
Bitcoin ETFs beat Gold ETFs with 65% gain since launch
Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand
Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF
Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.