Terra remained the focus of the majority of the news in May due to a spiral collapse that resulted in losses of more than $ 40 billion in investor money. Despite some initial resistance from the public and severe backlash from the likes of CEO Binance Changpeng “CZ” ZhaoTerra co-founder Do Kwon managed to reopen the collapsed network with a new chain called Terra 2.0 (Phoenix-1).
The modified proposal to relaunch the network by increasing genesis liquidity, which introduced a new liquidity profile for pre-strike Luna Classic (LUNC) holders and reduced distribution for TerraUSD Classic (USTC) holders after the strike, was approved by the community with 65% of the vote. sih.
The new blockchain went live on May 28 after a hard fork. The new token remains Terra (LUNA) and the old one was changed to Luna Classic. With the launch of the new network, holders of LUNC, USTC and Anchor Protocol UST (aUST) are eligible to receive new tokens.
Despite industry -wide anger against Do Kwon – founder and parent company Terraform Labs facing lawsuits and investigations in South Korea – major crypto exchanges including Binance, Kucoin, FTX, Bitfinex and a few others announced support for the Terra 2.0 chain.
Cointelegraph reached out to Binance to ask about the reasons for listing LUNCs on the platform, especially when the market is still recovering from the effects after a $ 40 billion collapse. A Binance spokesman told Cointelegraph:
Binance said the goal of Terra 2.0 is to compensate those who have lost significant funds during a major network crash. As a platform, “Binance decided to let people trade air tokens to realize their assets.”
CZ also said he was not very optimistic about the future of Terra 2.0 ecosystem and the decision to list new tokens is based on helping investors recoup some losses. Speaking to Cointelegraph, Zhao said:
“We still need to ensure the continuity of people’s access to liquidity. We need to support the revival plan in the hopes that it will work.
Kraken CEO Jesse Powell also defended the LUNA listing, saying it was in public interest. However, he says the list is not necessarily the same as an endorsement for the controversial token.
Customer satisfaction seems to be a common concern for continued listings for these assets. Bitrue crypto exchange research analyst Whitney Setiawan told Cointelegraph:
“In exchange, Bitrue’s main priority is customer satisfaction, because it is true that we give Bitruers the freedom to invest in selected assets. We are still monitoring the progress of the Luna Foundation Guard investigation and will act immediately if my situation worsens.
Terra 2.0 sees severe volatility
Opening a new network is nothing less than a frenzy. To begin with, many investors claim that they are not properly compensated for the new airdrop. The Terra 2.0 team acknowledged the issue and said they were working to resolve the issue quickly.
Many users also joke about how the new airdrop is an insult, because people have lost hundreds of thousands of dollars and earned new tokens for about $ 50:
Lost $ 300k on $ LUNA
Get a $ 59 airdrop
Thank you do kwon and team
– Ash WSB (@ashwsbreal) May 29, 2022
The new airdrop token began trading on several crypto exchanges on 28 May. However, as many have warned, the new token showed very high price volatility on the first day of its re -launch, down more than 70%. Many investors who receive a new LUNA start selling as soon as they receive it, showing a lack of confidence in the new ecosystem.
LUNA listed for $ 18.85 on the day of the re -launch but then dropped to $ 5.71 before recovering half of the loss the day before the Binance listing. The token currently trades at $ 6.44, according to Cointelegraph data, almost one-third of the listing price.
Justin Hartzman, CEO of crypto trading platform Coinsmart, told Cointelegraph, “Prevention is definitely better than cure. Why register a job with some very visible flaws, noted by many well-known people on Twitter, and then not ignore it? The exchange should make it the listing process is safer and more stressful.Too much money and too much life is at stake here.
Users reported losing the amount of money they invested in LUNC write:
“I don’t see the bottom line here & I see anything I get as a bonus because I’ve eliminated everything as a loss & $ 0. If nothing else, I’ll sell everything.”
Do Kwon has a record of failed jobs
There was a famous meme on Crypto Twitter that compared the fates of two fund managers, who each lost billions of dollars to investors. One of them is Bernie Madoff, a well -known financier who was sentenced to 150 years in prison after running a $ 60 billion Ponzi scheme – the largest in the world – and Do Kwon, who was able to reopen a new network just two weeks after losing billions of dollars.
In 2009, Bernie Madoff lost $ 60 billion to investors. He was sentenced to 150 years in prison.
In 2022, Do Kwon lost $ 60 billion to investors after Luna fell to $ 0. He then created Luna 2.0. pic.twitter.com/CkCC8AKPVR
– Fintwit (@fintwit_news) May 29, 2022
The meme highlights the lack of regulatory oversight in the crypto space, where multi-billion dollar errors and fraud have no checks or balances.
Terra algorithm stablecoin collapse is not the first time Kwon has launched a failed experimental project. At the peak of the Terra collapse saga, it was revealed Do Kwon was also behind another failed stablecoin project called Cash Basis (BAC).
Many experts also believe that even if the exchange is responsible for listening to the community and listing new tokens, future projects led by Do Kwon will be difficult to accept. Zachary Greene, who runs the crypto-investing and finance website Greenery Financial, told Cointelegraph:
“I believe Do Kwon’s title operation will keep Terra 2.0 from being accepted and seen as a legitimate reboot. Whether he is responsible for a backup transaction or not, he appears to be blamed by the community and the crypto space for the disaster that collapsed LUNC and USTC. , any project with him as leader, at least for the next few years, will be undertaken by the crypto community.
The story of Terra and Terra 2.0 is still open. Whether something bad happened with stablecoin or if it was just a failed experiment, only time will tell.
Even in traditional markets, we have seen many times how executives fail to jump from one executive position to another. It’s not surprising to see Do Kwon at the helm of Terra 2.0, but it should definitely make investors pause and think twice before investing.
What made the case against Kwon was his unwillingness to understand the issue and take action. Many have been reminded of the USTC stake being backed by volatile assets and Terra using community funds to buy Bitcoin (BTC), but are generally ignored due to the high promises of the project management.
Terra’s founders and the majority of employees at Terraform Labs are currently under investigation on a variety of allegations including tax evasion, market manipulation and more. While the community cannot be blamed for approving the relaunch plan in hopes of reclaiming some of the funds by airdrop, Kwon who led the allegations could be a problem for the community in the long run.