The Biggest Crypto Scam in History: Terra (LUNA) Collapse
Investors lost $40 billion in a single day. Here’s the untold story of the Terra (LUNA) disaster and the lessons it offers.
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1️⃣ Terra’s Promise
Terra (LUNA) aimed to revolutionize payments through its algorithmic stablecoin, UST. Unlike USDT or USDC, UST maintained its $1 peg through an algorithm tied to LUNA.
2️⃣ The Fatal Flaw
UST’s stability relied on burning and minting LUNA. But under market stress, this system spiraled into chaos.
3️⃣ The Collapse Begins
In May 2022, UST lost its peg after mass withdrawals from Anchor Protocol, which offered unsustainable 20% yields.
4️⃣ A Death Spiral
To restore UST’s value, more LUNA was minted, flooding the market and tanking its price. UST fell to $0.10, and LUNA’s value crashed from $80 to nearly zero.
5️⃣ $40 Billion Gone
Terra’s market cap evaporated overnight. Exchanges delisted LUNA and UST as chaos unfolded.
6️⃣ Founder in the Spotlight
Do Kwon, Terra’s founder, once dismissed critics with confidence but shifted to damage control during the collapse. Emergency measures, including Bitcoin reserves, failed.
7️⃣ Legal Fallout
Do Kwon faced lawsuits, investigations, and an arrest warrant. Detained in 2023, he was charged with fraud and market manipulation.
8️⃣ Lessons Learned
The Terra collapse highlights the risks of algorithmic stablecoins and high-yield DeFi projects.
• Key Takeaways:
• Research before investing.
• Don’t invest more than you can afford to lose.
• Volatility can destroy even top projects.
Stay cautious in crypto. Knowledge is your best defense.
