Jump Crypto has released a report on the crash of TerraUSD (UST), revealing that while whales were exiting their positions in the algorithmic stablecoin, retail investors kept buying.
Jump Crypto, the cryptocurrency arm of Jump Capital, is one of the main backers of the collapsed Terra blockchain. The report is its first public statement since the blockchain collapse.
The firm revealed that its report is based on available blockchain transactions, which shows that several large investors with over $1 million UST liquidated their holdings very early into the depeg leaving retail investors with worthless tokens.
Interestingly, retail investors holding less than 10,000 UST increased their exposure between May 6 and May 9. But big depositors reduced their UST position in Terra’s Anchor Protocol by nearly 15% on May 6, when UST first lost its peg.
However, the increased exposure from small investors was not enough to counteract the outflow as “their total position size was an order-of-magnitude smaller than that of mid-sized and large depositors,” the report said.
Claim of seven wallets was ‘part of a larger trend’
The report also acknowledged the previous report from blockchain analytics platform Nansen. Nansen claimed that the collapse of the Terra blockchain is attributable to seven wallets, including one associated with crypto lender Celsius.
According to Jump Crypto, the seven wallets highlighted by Nansen were “part of a much broader trend” that drove the outflows in Anchor in the beginning of the UST de-peg.
One portfolio in particular was key to the collapse after it reduced its UST position by around $85 million on May 7. Many believe that the wallet started the chain of events that ultimately led to the network’s collapse.
There has been speculation about who is behind the wallet, with many saying it belongs to a crypto trading firm. But the report said it is unlikely the wallet is associated with a trading entity judging by its history.
The report does not discuss the role of the Luna Foundation Guard (LFG) in the collapse. Jump Trading’s president, Kanav Kariya, is on the foundation’s board of directors. LFG had attempted to stabilize the UST peg by selling off its bitcoin stash, but the effort was too late to save the ecosystem.
The collapse of Terra blockchain last month wiped off around $40 billion from the industry and was further exacerbated by the wider crypto market sell-off. Regulators around the world have since increased their scrutiny of Terraform and the crypto industry at large.
