In May, TerraUSD (UST) lost its peg to dollar
Luna Foundation GuardThe entity behind the collapsed Terra ecosystem has shared a technical audit report. This, it claims, provides complete transparency in trading, blockchain records and efforts to protect the price of TeraUSD (UST) between May 8 and May 12 of this year.
In May, TerraUSD (UST) lost its peg to the dollar. In an effort to regain the peg, more LUNA tokens were produced, resulting in a market glut and a decrease in the value of each LUNA token in use. LUNA’s price crashed from over $120 to less than 1 cent in a couple of days.
During the crash, many investors saw a significant drop in the value of their holdings in LUNA and UST.
The LUNA collapse was estimated to cost more than $60 billion in losses. And while Luna’s collapse was unprecedented, the FTX fallout sent shockwaves across the industry.
Some of the most infamous financial scams of recent decades have been compared in response to the collapse of cryptocurrency exchange FTX, which reportedly saw at least $1 billion in client funds disappear, potentially affecting more than a million clients.
Here are new details
In a blog post, LFG said it spent nearly $2.8 billion (80,081 BTC and 49.8 million in stablecoins) to defend UST’s peg, consistent with LFG’s tweets on May 16, 2022. Additionally, TerraForm Labs said it spent $613 million of its own capital to defend the UST peg. It states that the reserves were unfortunately insufficient to defend against extreme market volatility and eventually led to UST depegging.
JS Held, a third-party auditing firm hired by the Luna Foundation, claimed to have relied solely on primary raw data rather than TfL’s representations, the credibility of the audit report is still in question.
Do Kwon, the founder of collapsed stablecoin project Terra, is the subject of an Interpol red notice. He has refused to share his location, but prosecutors have indicated that he may be in Europe. He has denied any wrongdoing in the past and tweeted that he is not “on the run.”
