Terra

Terra (LUNA) is a public blockchain protocol that emerged from Terra Classic. Due to limited liquidity, LUNA sell orders will not be accepted from 10:51 PM - 11:11 PM CT. Please submit your orders outside of this window.

On Thurs. May 25, Terraform Labs announced that the Terra community had approved the creation of a new blockchain, Luna 2.0. The creation of this new chain is a response to unprecedented volatility on the Luna 1.0 chain, which caused the price of the original LUNA and UST to collapse almost to zero. 

As part of the migration, the former asset LUNA will become Luna Classic, or LUNC. A portion of LUNA holders will be eligible to receive an airdrop of the new token (LUNA), per the terms outlined by Terraform Labs.

The new Terra blockchain will utilize the new LUNA, and will not include the UST stablecoin. 

On 9 May, after nearly 18 months of steadily holding its value against the US dollar, the so-called stablecoin TerraUSD (UST) became unpegged. The uncoupling triggered a cascade response that ultimately crashed UST and the Terra (LUNA).

TerraUSD (UST) is a stablecoin, which means it is a cryptocurrency pegged to a fiat currency. In this case, it is designed to be pegged to the US dollar. Stablecoins are intended to allow investors to hold crypto assets with less volatility, and trade a dollar equivalent without needing to cash out their positions. 

UST is considered an algorithmic stablecoin because instead of being backed by assets such as cash or cash equivalents, it is supported by on-chain code that facilitates a change in the supply and demand between UST and LUNA.

LUNA is the cryptocurrency that works in unison with UST in an effort to keep UST in 1:1 parity with the US dollar. One dollar of LUNA can always be converted at a 1:1 ratio to 1 UST. 

For example, if LUNA is trading at $10, then it can be redeemed for 10 UST, and 10 UST can be redeemed for 1 LUNA. If UST rises above its $1 peg to $1.01, then traders can swap 1 USD of LUNA for 1 UST. This trade burns 1 LUNA and mints 1 UST, which can then be sold for 1.01 USD. 

If UST rises to $1.02, then traders can sell for a 2 cent profit, and so on. 


In theory, increasing the supply of UST and lowering the supply of LUNA brings the price of UST back down until it reaches $1. Conversely, if UST drops below the $1 peg, then traders will be incentivized to buy 1 UST for 0.99 USD, which can then be swapped for 1 LUNA. 

This move burns UST and mints LUNA, sending UST higher towards the $1 peg.

UST lost its peg to the dollar starting on May 8th following large withdrawals of UST from Terra’s DeFi protocol Anchor. UST fell quickly, and struggled to regain its peg because the burning of UST and minting of LUNA couldn’t keep up. 

UST descended rapidly as the prolonged de-pegging led to uncertainty and a snowball effect of larger withdrawals. 


A significant share of circulating UST was locked on Anchor, a Terra-based lending and borrowing protocol that paid users 19.5% to stake UST. 

The LFG used up about $2.9 billion of its bitcoin reserves in an unsuccessful attempt to revive UST. 

WSJ 
Decrypt 
Bloomberg

*This content is for educational purposes and is not investment advice.

Luna Classic (Former Terra)

Kwon is facing fraud charges in the U.S. around his role in Terra's collapse.

Terra's Do Kwon Wins Extradition Appeal in Montenegro

In its objection, the regulator argued that Terraform Labs "siphoned" $166 million into an "opaque slush fund" for law firm Dentons.

Terraform Labs Hits Back at SEC 'Government Overreach' Over Special Counsel Payment

Terraform Labs has challenged the SEC's objection to its retention payment of Dentons as special counsel in its Chapter 11 bankruptcy case.

Terraform Labs counters SEC's ‘slush fund' claims, alleges government overreach

Do Kwon, the embattled former CEO of Terraform Labs, is currently stranded in Montenegro due to extradition delays, following accusations by the U.S. Securities and Exchange Commission (SEC) of conducting a massive fraudulent crypto scheme.

Terraform Labs Founder Do Kwon Faces Extradition Delay in Montenegro Amid SEC Fraud Allegations

The regulator argued that Terraform Labs "siphoned" the money into an "opaque slush fund for its lawyers."

SEC Hits Out at Terraform Labs Law Firm's 'Staggering' $166 Million Retainer

The U.S. Securities and Exchange Commission (SEC) has raised objections to a $166 million retainer payment to lawyers of Terraform, according to Reuters.

SEC Objects to Terraform's $166M Retainer of Law Firm Dentons: Reuters

The SEC has asked a US bankruptcy court to deny Terraform Labs' retention of Dentons as its special counsel in a filing submitted Tuesday.

SEC challenges Terraform Labs' ‘suspicious' $166 million payment to lawyers in court filing

Terra co-founder Do Kwon will likely miss the start of the SEC trial on fraud charges amidst the delay in his extradition, Reuters reported.

Terraform Labs' Do Kwon to miss start of SEC trial on fraud charges: Reuters

The cryptocurrency entrepreneur Do Kwon will likely miss at least the start of a scheduled March 25 trial on U.S. Securities and Exchange Commission fraud charges because of a delay in extraditing him from Montenegro, his lawyer said on Monday.

Terraform Labs co-founder Do Kwon to miss start of US SEC trial

Terraform Labs co-founder Do Kwon is set to be extradited to the United States after a Montenegrin court's final decision. What Happened: The Podgorica High Court denied South Korea's request to extradite Kwon, according to local reports.

Do Kwon To Be Extradited To US As Montenegrin Court Rejects South Korea's Request

A court in Montenegro on Wednesday ruled that crypto entrepreneur and Terraforms Labs co-founder Do Kwon should be extradited to the United States, rather than to his home country South Korea, to stand trial on fraud charges, the Wall Street Journal reported.

Montenegro court says Do Kwon should be extradited to US, WSJ reports

Do Kwon, former crypto billionaire and founder of the Terra (LUNA) ecosystem, will be sent to the United States to face fraud charges. In 2022, Terra's UST stablecoin and its associated altcoin LUNA went to virtually zero after its pegging mechanism didn't work as intended, wiping out roughly $40 billion in value within days.

Do Kwon Will Be Extradited to United States Following Montenegro Court Ruling: Report

In a landmark decision, the High Court in Podgorica has ruled that the former Terraform Labs CEO, Do Kwon, will be extradited to the United States, sidelining South Korea's request for his extradition. The court's ruling comes after extensive deliberations on the legal and political implications of the extradition. Report Details Do Kwon's U.S.

Do Kwon's Fate Sealed — Montenegro High Court Opts for US Extradition in Legal Tug-of-War

Terraform Labs co-founder Do Kwon will be headed to the U.S. where he faces fraud claims that led to devastating losses for U.S. investors.

Terraform Labs' Do Kwon set to be extradited to the U.S., according to local media

An appellate court in Montenegro is revoking the extradition of disgraced Terra (LUNA) founder Do Kwon to the US and has ordered a retrial.

Montenegro's Appellate Court Revokes Terra (LUNA) Founder Do Kwon's Extradition to the US, Orders a Retrial

Following the Montenegro Appeals Court's decision to reject the extradition requests for Terraform Labs co-founder Do Kwon, the panel from the Appeals Court has nullified the latest decision by Podgorica's High Court to extradite Kwon to either South Korea or the United States.

Legal Twist Keeps Terraform Labs' Co-Founder Do Kwon in Montenegro, Appeals Court Questions Extradition Grounds

The appellate court decided that the original decision to extradite Kwon was "affected by significant violations."

Do Kwon Will Not Go to U.S. as Montenegro Revokes Extradition

The Montenegro Court of Appeals has again canceled the approval of Terraform Labs co-founder Do Kwon's extradition to South Korea or the U.S.

Do Kwon's extradition revoked again, granted appeal by Montenegro court

The appeal is a minor victory for Kwon, who initially won an appeal in November only for it to be subsequently overturned.

Do Kwon Wins Second Chance to Appeal Extradition From Montenegro

Han Chang-joon, the former financial officer of Terraform Labs, has been extradited to South Korea from Montenegro, where he had been held since his arrest in March 2023.

Do Kwon's Former Terraform Labs CFO, Han Chang-joon, Extradited to South Korea

The former developer of Terraform Labs testified that Terra executives knowingly deceived investors, according to local media.

Former Terra developer testifies against Do Kwon at South Korean court: report

Montenegro recently extradited the former Terraform Labs financial officer Han Chang-joon to South Korea where he faces fraud-related charges. According to the Montenegro police, the decision to extradite Han was made by the country's Justice Ministry.

Former Terraform Labs Financial Officer Has Been Extradited to South Korea — Montenegro Police

Former Terraform Labs CFO Han Chang-joon faces charges in South Korea including fraud that could carry a life sentence.

Terraform Labs Former CFO Extradited From Montenegro to South Korea

Han Chang-joon was handed over to South Korean authorities following a decision by the Balkan country's Ministry of Justice.

Terraform Labs former CFO extradited to South Korea

Han Chang-joon was charged with carrying falsified travel documents alongside Terra co-founder Do Kwon last year.

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