In early May 2022, LUNA was trading at around $100 USD, but by May 15th, it had nosedived to less than $0.002 USD. This drastic drop led to a staggering loss exceeding $7 billion for investors. 🌟🌟
The collapse was triggered by the failure of Terra's algorithmic stablecoin, US Terra (UST), which was designed to maintain stability through LUNA's liquidity. However, this model proved unstable as UST lacked support and was highly volatile. 🧧
As UST lost 40% of its value, LUNA’s price took an unrecoverable dive. While some traders exploited this volatility, many investors faced significant losses, including their life savings.
Terra's founder, Do Kwon, fled and remained elusive until his capture at an international airport in Montenegro. Both South Korea and the United States sought his extradition on financial crimes, with South Korea eventually securing his extradition.
Do Kwon's efforts to salvage the project by launching another cryptocurrency also named LUNA failed, rendering both tokens LUNA and LUNC largely worthless.
This event underscores the inherent risks in the altcoin market, highlighting the importance of cautious investment strategies. Soon after, another major scandal involving the FTX exchange emphasized the volatility and potential for fraud in the cryptocurrency industry. ♦️♦️
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