LUNA is a token developed alongside the algorithmic stablecoin TerraUSD (UST) by Terraform Labs to keep its peg of $1. On May 9, UST lost its value by over 99% and has dropped to $0.15 as of May 14. .
Luna crashed due to its link to UST which decoupled from the dollar earlier this week to collapse below one cent. The price of LUNA also plunged from $62 on May 9 to less than a cent by May 14.
By press time, LUNA was up 364% in the last 24 hours trading at $0.0004, according to Coingecko.com. At some point, the token had gained 2,000% despite the general cryptocurrency market trading in a volatile state.
It can be assumed that the pump activity is due to difficulties in shorting LUNA considering that margin trading was suspended by major exchanges with no signs of relisting.
The scenario creates a perfect environment for the token to surge in value with short positions borrowing large amounts with the intention of short selling it at a given price.
Terra’s founder issues apology
The pump has also coincided with Terra’s founder Do Kwon issuing an apology to investors and the general LUNA community.
Through his Twitter account, Kwon stated that he had not benefited from the crash, unlike other crypto scams where founders make huge profits before the assets lose value.
In response to the crash, the Terraform Lab has resolved to restart the blockchain with some investors hoping to make gains from the crash.
Some crypto observers and investors are now likening Terra to meme coins like Shiba Inu which recorded a significant surge in value in 2021. Due to the panic from Terra’s collapse, there are fears that cryptocurrencies like SHIB might undergo the same fate due to a lack of real use cases and dominance by whales.
In the wake of Terra’s crash, it has also emerged that Kwon has a history of failed stablecoins including Basis Cash that was to be pegged on the U.S. dollar. However, the stablecoin failed to make it after trading below $1.
Ironically, eight days before the LUNA crash, Kwon in an interview with American-Canadian chess player Alexandra Botez projected that 95% of companies entering the crypto space will die while noting that “there’s also entertainment in watching companies die too”.
Generally, LUNA’s collapse has impacted different classes of investors who saw their money wiped out in hours. As reported by Finbold, popular British YouTuber KSI, also known as JJ Olatunji’s $2.8 million LUNA investment was wiped out to less than $1,000.
Coinbase delists Terra tokens
Following the crash, exchanges are now delisting the Terra ecosystem assets with Coinbase emerging as the latest entity. In a blog post, Coinbase stated that it will suspend trading in UST and WLUNA on May 27, 2022. The suspension will affect Coinbase, Coinbase Pro, and Coinbase Exchange.
The disintegration of Terra’s ecosystem has also resulted in safety concerns involving Kwon’s family. Reports indicate that Kwon’s wife sought police protection after an unidentified assailant broke into her apartment asking for Kwon. She is currently under emergency police protection.