As TerraUST founder Do Kwon fought to salvage the failing stablecoin, his wife reportedly sought police protection in the latest blow to a cryptocurrency some fear may trigger a “Lehman moment” for the market.
On Friday, South Korean media outlet MoneyToday wrote an unidentified person broke into her apartment building, rang the doorbell to ask if Kwon was home, before leaving the premises after she said he wasn’t.
Kwon’s wife has now been provided with security after she requested emergency protection, police in Seoul’s Seongdong-gu district told Forkast.
The developments come amid a wipeout in the value of Luna, a coin that served to prop up and maintain TerraUST’s dollar peg.
Some investors who had owned Luna posted on Reddit that people were suicidal after losing everything.
Kwon, who developed a reputation for belittling and attacking critics of his project, has now been likened to Elizabeth Holmes, found guilty of fraud for her Theranos deception.
TerraUST was designed to trade at a one-to-one ratio to the greenback, but without some form of actual collateral that should underpin its value, as is the case with Tether.
Instead it employed an algorithmic process of creating and then destroying its very own supply of Luna coin, which served as a kind of shock absorber.
14/ Terra’s return to form will be a sight to behold.— Do Kwon ? (@stablekwon) May 11, 2022
We’re here to stay. And we’re gonna keep making noise.?
When the peg started to fail, the protocol was designed to stabilize the value through the minting of more Luna—only the sustained attack meant it was suddenly being created at an exponential rate.
Latest indications suggest the supply of Luna coins in circulation went from a few hundred million to now 6.9 trillion, with the token trading at levels virtually near zero after hitting an all-time high of $119 just last month.
Besides Do Kwon going down, is there going to be any accountability had for those who mega-shilled the greatest ponzi in crypto history?— sassal.eth ??? (@sassal0x) May 12, 2022
If everyone just continues on like nothing happened then we're just going to repeat the same mistakes again.
With the supply of Luna ballooning into Zimbabwe levels of hyperinflation, major global crypto exchange Binance delisted Luna on Friday in what some are now calling the “Luna Brothers moment” in a reference to the 2008 collapse of the Wall Street investment bank Lehman Brothers.
The move sparked speculation that BlackRock and Citadel could be behind it, and prompted crypto exchange Gemini to deny speculation it had played any role in an attack on the peg.
A spokesperson for Citadel later contacted Fortune to deny the allegations: “Citadel was not involved in this situation and does not trade stablecoins, including Terra UST.”
Ran Neuner, a South Africa–based crypto YouTuber, told Bitcoin influencer Layah Heilpern he was dealing with the consequences of being “absolutely irresponsibly long” in Luna.
He argued the collapse of a tier 1 coin on par with an Ether or Ripple XRP—valued at $20 billion and supporting a broader $60 billion ecosystem built on top—was unprecedented and would drag out the bear market in digital assets for much longer.
“There has never been an event in crypto where $80 billion was wiped out of the market, never,” he told her in a webcast. “A lot of people lost a lot of money on Luna…and these are crypto believers.”
Following a plan laid out by Kwon on Wednesday, his Terraform Labs company has tried to resume normal function on the blockchain network on Thursday, only to later abort the attempt after just 4,089 new blocks were added to its chain.
The Terra blockchain has officially halted at block 7607789.— Terra (UST) ? Powered by LUNA ? (@terra_money) May 13, 2022
Terra Validators have halted the network to come up with a plan to reconstitute it.
More updates to come.
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