In an interview with The Wall Street Journal, Kwon said, "I have great confidence in our ability to build back even stronger than we once were."
Terra coins holding the initial of UST and LUNA were like the eye candy in the crypto market in the following months after their launch in 2018. The UST stable coin is pegged to the US dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies. It had a one-to-one peg through an algorithm and was supposed to never go below the $1 mark. The coins had a promising picture back then and many crypto exchanges supported them including Binance and Coinbase.
But everything came crashing down in early May when the cryptocurrency market was forming a unique pattern of trading that was coinciding with the movement of the stock market. The correlation between the fall in the crypto market tracking the downside in the equities has only increased so far in these two months due to macroeconomic drawbacks.
The fall in Terra coins was intense and even mind-boggling, investors couldn't wrap their heads around the flash crash which resulted in the UST erasing its peg and dropping by over 99%, while its LUNA took the most brutal beating by nosediving to zero levels - resulting in $40 billion crash.
The free fall in Terra sisters even dragged broader crypto market with leaders like Bitcoin and Ethereum also facing the heat and witnessing drastic correction. The crash also led to a massive decline in other stable coins like Tether.
Further, the flash crash led to massive turmoil among investors. Do Kwon was instantly blamed and many accused him of defrauding. Kwon received criticism for his plans from renowned Binance founder Changpeng Zhao and Vitalik Buterin, as well as from disgruntled UST investors.
Zhao also took to his Twitter and revealed how hefty the loss was in the Terra crash.
As per Zhao, during the year 2018, Binance received 15 million tokens of LUNA for its investment of $3 million into the Terra network. At its peak in April this year, the investment in stable coins reached a whopping $1.6 billion. However, Zhao did not sell any of LUNA and when the stable coin crashed to zero limits - the tokens were just a worth couple of dollars in May.
As per the above-mentioned American newspaper, Do Kwon is facing lawsuits. Groups representing more than 90 people in South Korea have filed complaints against Kwon accusing him of fraud and illegal fundraising. Also, a US law firm representing a Chicago investor has filed a lawsuit against Kwon, his company Terraform Labs, and several other firms accusing them of fraud and the sale of unregistered securities.
While one investor even reached his house in Seoul, and rang his doorbell, prompting Kwon's wife to seek police protection, according to local media reports.
In a latest news, several Terraform Labs have been put on no-fly list amidst the lawsuit.
As per Reuters report on Wednesday, an official at South Korea’s Supreme Prosecutors’ Office, who declined to be named as is customary in South Korea, said multiple Terraform Labs staff had been put on a no-fly list. However, a Terraform Labs spokesperson said in a statement, “We are not aware of the details of the reported ban."
On the accusations, Kwon said he personally lost money in the crash.
In the interview, Kwon said, "I made confident bets and made confident statements on behalf of UST because I believed in its resilience and its value proposition." Adding he said, "I’ve since lost these bets, but my actions 100% match my words. There is a difference between failing and running a fraud."
Kwon further told in the interview, "I’ve been devastated by recent events and hope that all the families who’ve been impacted are taking care of themselves and those that they love."
When asked about being a billionaire when LUNA traded near $100, Kwon said that was probably the case, though he had “never really counted". Although he added, that he lost nearly all his net worth in the crash.
Talking about his monetary losses, Kwon said, this doesn’t bother him, and added. “I live a fairly frugal life."
Terra which is a blockchain protocol using fiat-pegged stablecoins, was founded in January 2018 by Daniel Shin and Do Kwon. However, it was launched in April 2019. Before hitting the market for public trading, the token LUNA was first made available in a private token sale for initial investors in August 2018, and it raised a massive $32 million from investors such as Binance, OKEx, and Huobi.
Since its inception, as per PitchBook, Terraform Labs raised over $200 million from investors including Coinbase Ventures and Mike Novogratz’s Galaxy Digital Holdings. The latest deal amounted to $150 million as early stage VC last year in July. There are about 46 investors so far in Terraform Labs.
Binance is among the many investors who lost hefty in the Terra crash.
Last month, Binance announced to terminate Terra from trading on its app and wallet. However, during the Terra 2.0 launch, Binance announced that they are working closely with the Terra team on the recovery plan, aiming to provide impacted users on Binance with the best possible treatment.
After successful voting, Kwon was able to launch Terra 2.0 on May 27, where the original Terra chain has been rebranded as Terra Classic, while a new chain has been created with the existing name Terra and made available for trading.
Under the rebranded Terra Classic, the original cosmos chain will still run, however, with market swaps (mint/burn function) disabled. Further, all balances will continue to be the same. Luna has become Luna Classic (LUNC). Also, Terra stablecoins (UST, KRT, EUT, etc.) has been renamed Terra Classic stablecoins (USTC, KRTC, EUTC, etc.).
The new chain Terra has assumed all Terra branding assets. Notably, Terra is also a cosmos chain, however, will not have the treasury, oracle, or market modules of the original chain. The new chain’s native mining token is called Luna. Also, Terra stablecoins (UST, KRT, EUT, etc.) will not be included in the new chain.
As per Coingecko data, Terra LUNA traded at around $1.96 up 0.4% on Thursday with a market cap of $247,607,167. The new LUNA did reach an all-time high of $18.87 on May 28 before correcting. The loss is nearly 90% from its peak level last month but that was also because of de-pegging.
Terra LUNA clocked an all-time low of $1.66 on June 18, and since then had risen by nearly 18%.
Meanwhile, Terra Classic traded at $0.00005819 up by 1.6%. It had a peak level of $125.85 on March 31, 2022, and dropped by 100%. However, from its all-time low of $0.00000119 on May 13, the token has risen by 4,886.9%.
Currently, Terra Classic's weekly gains are more than 93%. In the last 14 days, the gain is over 26%.
The revamped Terra tokens have received notable support and expectations are that the new LUNA will gain value ahead.
Kwon said in the interview, "Many builders are in the process of relaunching their apps on the new chain."
Before TerraLabs, Kwon had previously founded and served as CEO of Anyfi, a startup providing decentralized wireless mesh networking solutions. Also, he has worked as a software engineer for IT giants like Microsoft and Apple.
Earlier this month, Rajagopal Menon, Vice President, WazirX on the crypto crash said, "Crypto markets have seen a correction due to weak global cues. Internationally, stock and crypto markets have become highly correlated. The inflation rate globally has also been a major concern for investors. In the US, it is at a 40-year high at 8.6% and in the UK at 9%; interest rate hikes across major crypto nations are also a growing concern as they lessen liquidity. Both the indicators have led to a massive sell-off."
"Hence, the investors have adopted a wait-and-watch stance as the early indicators are in the red. We expect this bearish market trend to persist in the near short term," Menon added.
