Mysterious Wallet Behind Terra (LUNA) Crypto Crash Identified

It has been nine months since the crypto project Terra (LUNA) experienced a catastrophic collapse in May of 2022. In the span of just one week, Terra’s algorithmic stablecoin, UST, was unable to keep its exchange rate pegged to the U.S. dollar value. As a result, both UST & LUNA’s price experienced a precipitous decline, with UST losing about 99% of its value. It’s speculated that there were a number of factors contributing to the massive crypto crash, as $60 billion got wiped out of the cryptocurrency space.

Mystery Behind “Wallet A”

In the aftermath of the LUNA crisis, numerous post-mortem examinations have been carried out, and a certain “Wallet A” has emerged as the primary suspect; shown to have played a significant part in the UST de-pegging event.

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According to Igor Igamberdiev, Head of Research at Wintermute, the “Wallet A” swapped 85 million UST for USDC, which caused an imbalance in the UST/3CRV Curve pool, which eventually led to the collapse of the Terra (LUNA) ecosystem. Going by his research, there is a good possibility that the wallet associated with last year’s UST depeg might belong to the trading firm Jane Street Group.

Igamberdiev’s study of the wallet’s transactions reveals that there is a “good possibility” that the wallet is associated with Jane Street. On May 3 of the previous year, Clearpool made an announcement that Jane Street had borrowed 25 million USDC from BlockTower using its permissioned lending pool. Based on this information, Igor was able to identify three addresses that belonged to the trading firm; one of these addresses, dubbed Wallet A, was of major relevance.

Multiple Wallets, Same Owner?

Two weeks later, the same wallet took out a second $25 million loan before moving the funds into a Coinbase hot wallet. However, Igamberdiev mentioned that the Coinbase wallet had been credited with 84.5 million USDC by the UST de-pegger prior to receiving the loan amount. And moreover, what comes as a surprise, Igor found that the wallet had no other interactions besides these deposits; therefore clearly indicating that the wallet could have belonged to the same entity.

Additionally, Igor noted that the wallet — supposedly owned by Jane Street — held UST on LUNA’s yield-bearing Dapp “Anchor” for a month, which necessarily did not indicate that the entity had nefarious intentions. At the time of writing, Jane Street has not yet provided a response to any of these allegations. However, the crypto crash that was precipitated by the LUNA debacle set off a year of cascading financial disasters that have not yet been abated.

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Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now – he has seen it all.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.