Terra Luna has been referred to as the Lehman Brothers of the crypto world. Watching the small cryptocurrency spiral and the crash was devastating for many people. It was a prime example of why you don’t “put all of your eggs in one basket,” so to speak.
There are a number of things that contributed to the coin’s downfall. Of course, the stock market in the United States has been plummeting for a few weeks now. The crypto market often mirrors the activity of the S&P. On top of that, the creator of Luna set the coin and its investors up for failure.
Meet the Creator of Terra Luna
Do Kwon is the creator of TerraUSDT and the Luna coin. Back in 2018 when he created Luna, Kwon called it his “greatest invention.” He quickly raised $200 million from investors, who he affectionately called “Lunatics.” Eventually, Luna’s value grew to over $40 billion.
Investors were ecstatic. Founds, day traders, and the coin’s initial investors were reeling with excitement, but some people were worried about the stability of the coin. To this Kwon responded, “I don’t debate the poor.”
Typical crypto-rich brat behavior, right?
As many of you know, last week, Terra and Luna came crashing down. It created a domino effect throughout the crypto world. Even Bitcoin took a huge hit. Across the cryptocurrency economy, there was a total loss of $300 billion.
When something like this happens, people generally look for someone to blame. It turns out Do Kwon may be the one to take the fall.
Do Kwon is Facing Charges
Kwon is facing legal prosecution in South Korea. The collapse of the coin and the subsequent loss of billions of dollars around the world has led investigators to look into Terraform Labs, Kwon’s company behind the crypto coin.
Five investors in South Korea have also filed criminal complaints against Kwon for fraud and other various violations of financial regulations in South Korea. Around 280,000 people in S. Korea lost $70 billion in crypto when Terra and Luna fell. Kwon is also facing about $78 million in tax fines.
Court documents have also revealed that Do Kwon dissolved Terraform Labs just days before the crypto crash. It’s possible that he knew and wanted to jump ship before the proverbial s*** hit the fan.
What the Crash of Terra Luna Should Teach Crypto Investors
The crypto world is still largely unregulated. For investors, the crash of Terra Luna should teach you a few things.
- Investing in small crypto is really volatile.
- The crypto world is still a big target for fraud, criminal activity, and scams.
- There is still no real-world value attached to your crypto.
Right now, I’m not holding any small cryptocurrency any longer. The market may or may not recover and I may regret that decision. However, I’m glad I wasn’t holding a ton of Luna last week. If you were, remember that it will be alright. Even if the crypto doesn’t recover, you will.
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Drew Blankenship is a cryptocurrency investor, family man, father and lifelong automotive enthusiast. He lives in North Carolina with his wife, daughter and their dog Enzo.
