The collapse of crypto Luna and its associated terraUSD stablecoin were really Unexpected. As billions of dollars in crypto wealth have been vaporized by their diving shockwaves throughout the market.
Looking at the graph of the Cryptocurrency market nowadays, it looks unsafe in all possible directions. As Bitcoin and ether are at their lowest point since 2020, altcoins, dogecoin, and Cardano are falling even worse. Virtual Currency volatility and tempestuous economic conditions are affecting not just cryptocurrency, but also the stock market. This unprecedented dive is really painful for crypto investors.
On this impulsive collapse of Terra, Luna the Tommey has recently presented the bill focused on stablecoins and said that investors might be misrepresenting the nature of Terra. Luna promised huge returns offering “very dubious technology”, he added. In response to this collapse, Toomey told Barron’s that the Terra may be a fraudulent project.
Prominent hedge fund manager Bill Ackman concluded about Terra saying it was a pyramid scheme. He also warned that such fraudulent projects may also pose a threat to the entire cryptocurrency ecosystem.
Further, FTX CEO Sam Bankman-Fried had also stated that Terra was a Ponzi after the failure of the blockchain project, which was further compared to the infamous biotech scam Theranos. Bankman-Fried had an argument over whether the project was a case of “Mass enthusiasm.”
LFG’s funds were used to help the TerraUSD (UST) stablecoin to retain its [peg, unsuccessfully. The price of LUNA token remains virtually zero.
The CEO of Pershing Square Capital Management claims that investors were promised with 20% returns backed by the token value depending on the number of new buyers.
As there is no fundamental business the collapse of the token was obvious, as the supply of sellers overwhelmed buyers, the Luna token crashed to Zero virtually. This left a slew of investors in dust.