Terra/Luna Ecosystem Collapse Wipes $60 Billion in Value; Do Kwon Charged with Fraud
Incident Details
Summary
Between May 7-13, 2022, the Terra/Luna cryptocurrency ecosystem catastrophically collapsed. TerraUSD (UST), an 'algorithmic stablecoin' meant to maintain $1 parity, lost its peg and crashed to near zero, dragging LUNA (the sister token) from $80 to fractions of a cent. Approximately $60 billion in market value was erased in days. The collapse triggered a wider crypto market crash, contributing to the failures of Three Arrows Capital, Celsius Network, and Voyager Digital. Terraform Labs CEO Do Kwon had aggressively marketed Anchor Protocol, which paid 20% annual returns on UST deposits — an unsustainable rate critics had long flagged. South Korean prosecutors issued an arrest warrant for Do Kwon in September 2022; he was arrested in Montenegro in March 2023 and extradited to the US in 2024 to face federal fraud charges.
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