– 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: 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.
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:
Source: Ekta Mourya – FXStreet
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