The Terra-Luna Ponzi scheme grew to an incredible size, with the TerraUSD algorithmic stablecoin reaching a mind-boggling $40 billion and the Luna governance token growing to a market capitalization of $40 billion.

This growth was subsidized by Terraform Labs paying an unsustainable lending rate through the Anchor protocol.

Then the music stopped. The value evaporated and the subsequent collapse of Terra-Luna had a devastating effect on the wider crypto ecosystem, destroying trading firms, exchanges, and lending platforms.

However, Terra was far from the sole algorithmic stablecoin, and its spectacular collapse caused a ripple effect that was felt by many of its competitors. Some have pivoted, finding alternative designs with more collateral, but most have failed to see adoption in the industry.

Here we take a look at the current state of some of the better-known projects impacted by Terra’s spectacular demise.

Terra

Terra still exists as ‘TerraClassic,’ and it doesn’t look too dissimilar to how it did before the collapse.

This system has maintained much of the design of the original Terra-Luna system but doesn’t have the subsidized yield of Anchor.

This asset, which has completely failed to maintain its peg, currently trades for less than three cents and is no longer, meaningfully speaking, a stablecoin. It has a market cap of approximately $130 million, a tiny fraction of the nearly $20 billion it once commanded. 

Luna Classic, the corresponding governance token, has a market cap of approximately $500 million, a tiny fraction of the $40 billion it once commanded, according to data from CoinMarketCap.

USDD

USDD is the TRON native algorithmic stablecoin that was announced before the collapse of Terra-Luna. It was intended to duplicate much of Terra-Luna’s model but with an elevated lending rate of approximately 30%. 

USDD was supposed to be integrated into the heart of TRON, analogous to Luna, by November 2022, but this wasn’t achieved by the time Terra failed. This has since been abandoned as one of the project’s goals.

In many senses, USDD has abandoned almost all of the trappings of algorithmic stablecoins and has instead become a stablecoin collateralized by ‘burned’ TRX tokens and a few other assets. A significant amount of its reserves are held at Sun-advised HTX.

Read more: Justin Sun’s USDD removes 12,000 BTC without DAO approval

Nominally, there is a Decentralized Autonomous Organization (DAO) that governs this protocol. However, this appears to be fiction, with actual control over this project being much more centralized.

The governance page shows only a single vote; one that allowed burned TRX to be deployed by USDD, making it unclear if the DAO knows what ‘burning is.’

There are no votes for other major decisions, including the massive changes in protocol directions, the decision to hold reserves at HTX, or the substantial changes in the reserve composition for the stablecoin.

In a recent example, the stablecoin removed 12,000 bitcoins from its reserves without a corresponding vote.

The market cap for the coin has been remarkably stable since its launch, holding around $700 million, according to data from CoinMarketCap.

Celo/Mento

Celo is now a level-2 solution on Ethereum; when it launched, it was a layer-1 that closely mimicked the way in which Terra functions with an algorithmic stablecoin exchangeable for a corresponding governance token. 

This function has since been spun out into Mento, and instead of deriving value from convertibility into Celo Gold, it maintains value by over-collateralization of the Mento Reserve, including assets like CELO, sDAI, USDC, ETH, and BTC. 

The USD-pegged version of these stablecoins has a market capitalization of approximately $26.5 million, down from a peak of almost $120 million, according to data from CoinMarketCap.

Frax

Frax is a dollar-pegged stablecoin that started partially collateralized. However, now on version 3.0, its aim is to be wholly collateralized, principally by cryptocurrencies. 

Currently, the collateral for this coin is largely staked and directly held FRAX. 

The market capitalization for this token is approximately $640 million, down from a peak of approximately $2.9 billion, according to data from CoinMarketCap.

Read more: How to submit a Terra Luna or Anchor loss claim

Conclusion

Many projects that once hoped to emulate Terra’s incredible success have had to pivot as the consequences of its failure reverberated throughout the ecosystem.

Very few of these projects have seen new adoption since Terra’s failure, and more attention seems to be spent on alternative stablecoin designs like Ethena’s eUSD.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post How Terra collapse nearly killed algorithmic stablecoins appeared first on Protos.

Victims of the Terra/LUNA collapse who want to vote in bankruptcy proceedings have until August 21 to file claims for any crypto losses or forfeit any say in the debtor’s plan, according to a Delaware bankruptcy court. 

The notice, ordered on July 19, says claimants must submit a preliminary crypto loss form to the debtor claims and noticing agent, Epiq, as part of Terra’s Chapter 11 bankruptcy proceedings.

According to the notice, Terra/LUNA victims failing to submit their claims before the deadline, “Shall not be treated as a creditor with respect to such claim solely for the purposes of voting on the Debtors’ Plan.”

This is only for the voting plan, and the notice stresses that claimants who miss this deadline, “will not be barred from submitting a crypto loss claim at a future date, which will be established by procedures that will be disclosed in the future.”

Read more: Montenegro PM Milojko Spajić may have met with Do Kwon, report

Claimants can apply online or send a physical claim via mail to Epiq Corporate Restructuring. 

LUNA collapsed over two years ago, wiping out tens of billions of dollars. Former Montenegrin prime minister Dritan Abazović recently claimed that Do Kwon may have met with his successor Milojko Spajić to sell LUNA tokens to his Singapore hedge fund Das Capital. 

According to Abazović, Do offered Spajić millions of tokens at 10 cents a piece and he allegedly sold them at $118. As for Do, he’s still waiting to be extradited from Montenegro to either the US or South Korea. 

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Terra victims have one month to file crypto loss claims, court appeared first on Protos.

According to Montenegrin media, not only did Do Kwon and former Terra exec Han Chang-joon purchase luxury apartments in the Serbian capital of Belgrade before making their way to Montenegro, they may have met with the country’s prime minister, Milojko Spajić, at some point before their arrests.

Do and Han are well known for their involvement with failed algorithmic stablecoin protocol Terra/Luna, which collapsed two years ago.

As DLNews reported in April, Do and Han purchased real estate and parking spots in the best part of Belgrade — with the condominium they were staying in being worth in excess of $2 million. However, according to former prime minister and current MP Dritan Abazović, the duo may have been up to much more than just hobnobbing with the Serbian elite and avoiding law enforcement.

Abazović claims that a source told him Do and Spajić met at Topalovićeva 4 in Belgrade and that Spajić may have made a deal with Do to purchase millions of dollars worth of Terra/Luna tokens for a Bulgarian-based, Singaporean-headquartered hedge fund called Das Capital.

Topalovićeva 4 as seen on Google Street View, where Do and Spajić supposedly met.

Read more: Do Kwon can’t leave Montenegro, but owes the US millions

Abazović claims that Spajić was able to purchase the tokens for ten cents and later sell them for $118, though there was no evidence to prove the claim.

It’s worth noting that Spajić has indeed previously worked for Das Capital, though when he last helped inform any transaction for it or if the hedge fund is even involved in cryptocurrency is not clear.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Montenegro PM Milojko Spajić may have met with Do Kwon, report appeared first on Protos.

Terra founder Do Kwon has successfully appealed his extradition from Montenegro to the US or South Korea due to “significant violations” of criminal procedure from the Podgorica High Court.

The court approved Kwon’s extradition on November 24, so long as he first served the remainder of his four-month prison sentence.

Today’s announcement states Montenegro’s appeal court rejected this decision on December 14 after a successful appeal from Do Kwon’s legal team. 

Read more: Singapore rejects Do Kwon, Terraform Labs case dismissal

According to translated court documents, the High Court judge failed to hear Do Kwon about extradition to the US, only hearing him with regards to South Korea’s request.

Because of unclear reasoning and a lack of decisive facts regarding the legal prerequisites for extradition, the decision was annulled. As a result, the case has returned to the basic court for retrial.

Do Kwon still faces the possibility of extradition.

According to anonymous sources who spoke to the Wall Street Journal, justice officials from Montenegro have said in private that they plan to extradite Do Kwon to the US instead of South Korea.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Do Kwon reverses Montenegro’s extradition decision… for now appeared first on Protos.

Montenegro has approved Terraform Labs founder Do Kwon’s extradition to either the US or South Korea, according to Podgorica’s high court.

In a statement posted on Friday morning, Do Kwon’s legal requirements for extradition were found to have been met in both countries. However, Kwon must still serve four months in Montenegro prison for document forgery before he can face charges in South Korea or the US.

Two weeks ago, Do Kwon’s appeal against this four-month prison sentence was rejected by the Podgorica high court.

It remains unclear which country will win their bid for Kwon. However, the Terraform Labs founder seems to prefer facing criminal charges levied against him in his home country, South Korea.

Read more: Jump Crypto chief pled Fifth over alleged backroom Do Kwon deal

The Podgorica high court noted, “the defendent gave his consent to be extradited to the competent authorities of the Republic of South Korea under a shortened procedure, however, the Podgorica High Court found that it should still be decided.”

The statement continued to explain that since multiple countries have requested Do Kwon’s extradition, the decision doesn’t lie with him but with the Minister of Justice of Montenegro. This decision will be made through ascertaining which country has “priority.”

As many readers will recall, Do Kwon was accused of defrauding investors on a massive scale when the Terra/Luna ecosystem spectacularly crashed last year.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Do Kwon granted extradition, but to US or South Korea? appeared first on Protos.

Collapsed crypto ecosystem Terra has warned whatever users it has left to “avoid interacting with sites with the terra(dot)money domain” until further notice after it was apparently hacked and used to carry out phishing attacks.

According to web3 developer and X user Kiruse, as of today, the site was “still a phishing site” and users were warned not to enter their seed phrase.

Terra’s official X account has advised its users to only refer to its official X (formerly Twitter), Telegram, and Discord channels for updates.

There appears to have been significant confusion around the status of the site since the problem was first announced by Terra on August 19. Terra claimed that “sites are coming back online,” however, two days later, there’s still no official announcement that the problem has been solved.

Read more: South Korea court says Terraform Labs’ crypto token Luna wasn’t a security

Despite Terra’s domain-related problems, the company’s blockchain infrastructure apparently remains secure.

Since its collapse in May last year, the problems have kept coming for Terra and its parent company Terraform Labs.

Back in April, the company’s co-founder Daniel Shin was indicted in South Korea on several charges, including violations of capital markets law.

Nine other people were indicted alongside Shin and authorities froze a combined 247 billion won ($185 million).

In July, a New York judge denied a motion to dismiss by Terraform Labs in its ongoing case with the Securities and Exchange Commission (SEC). The judge denied claims from Terraform Labs and its founder Do Kwon that the agency lacked jurisdiction and that the TerraUSD stablecoin didn’t qualify as a security.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on Twitter, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Terra warns users after hackers turn domain into a ‘phishing site’ appeared first on Protos.

Interpol has confirmed that Terraform Labs founder Do Kwon has been arrested in Montenegro’s capital city airport attempting to board a plane to Dubai with falsified Costa Rican and Belgium passports. The United States has subsequently filed eight counts of criminal charges against Kwon.

Montenegrin authorities confirmed his identity through a fingerprint match with the help of Interpol and South Korean officials, where Kwon is wanted on charges related to the collapse of his company’s algorithmic stablecoin Terra. The country revoked Kwon’s South Korean passport and sought the help of Interpol back in September to arrest the fugitive, who fled from his native South Korea to Singapore, then to Dubai, before last being spotted in Serbia back in December.

The United States Securities and Exchange Commission (SEC) filed securities fraud charges against Kwon in February. It cited the Anchor Protocol’s 20% interest rate offer on Terra deposits. Now, the US District Court Southern District of New York has charged Kwon with eight counts of criminal acts:

• conspiracy to defraud,
• two counts of commodities fraud,
• two counts of securities fraud,
• two counts of wire fraud,
• and market manipulation.

Kwon has consistently denied that he was a fugitive and claimed charges against him were “politically motivated.” He taunted authorities on Twitter, offering to set up a meeting with law enforcement, writing the words “pew pew.”

Read more: Explained: SEC allegations against Do Kwon and Terraform Labs

Now that he’s been caught, Kwon can revel in the fact that he’s a highly desirable man — indeed, he’s wanted in at least three countries. Along with South Korea and the US, Singapore is keen to bring Kwon in to face its own line of questioning. At the start of March, the island nation announced that it had finally opened an investigation into the founder.

Montenegro doesn’t have an extradition treaty with the US nor with South Korea. However, both the US and South Korea are now seeking extradition. South Korean authorities previously travelled to Serbia, where Kwon was last spotted, in hopes of negotiating a handover agreement.

It remains unclear where Kwon will end up.

How Do Kwon got here: A recap of Terra’s collapse

Terra and its counter-coin, LUNA, collapsed in May 2022 after Terra lost its peg to the dollar. The analytics company Elliptic says it wiped out $42 billion in value.

Elliptic also scrutinized Luna Foundation Guard’s (LFG) shuffling of the $3.5 billion reserve fund, which it held in bitcoin. Luna Foundation Guard said it would lend $750 million bitcoin to OTC trading desks to attempt to recover Terra’s target price of $1.

The LFG moved its entire bitcoin holdings to Gemini and Binance. Elliptic couldn’t confirm that LFG used the bitcoin holdings’ value to buy Terra.

Read more: Top South Korean officials follow fugitive Do Kwon to Serbia

The collapse caused a cascading effect throughout the digital asset industry. Celsius Network declared bankruptcy due to overexposure to Terra’s associated DeFi app, Anchor Protocol. Three Arrows Capital also declared bankruptcy.

The Terra/LUNA collapse also deepened an existing decline in overall digital asset markets. Bitcoin dropped under $30,000 when Terra disintegrated and dipped under $20,000 in June 2022.

For more informed news, follow us on Twitter, Instagram, and Google News or subscribe to our YouTube channel.

The post Will arrested Terra founder Do Kwon be extradited to the US or South Korea? appeared first on Protos.

New research suggests that there’s a “good chance” Terra’s collapse was largely triggered by quant trading firm Jane Street.

Igor Igamberdiev, head of research at crypto market maker Wintermute, believes that Jane Street is likely related to the notorious ‘Wallet A,’ which swapped 85 million UST for USDC and imbalanced the UST/3CRV Curve pool. Wallet A is often considered to be a major contributor to the depegging of Terra in May.

If true, the news would confirm rumors that have been swirling for months that Jane Street was involved.

Igamberdiev was able to identify three wallet addresses belonging to Jane Street through an announcement made just days prior to Terra’s crash. On May 3, it was revealed that Jane Street borrowed 25 million USDC from Block Tower through its permissioned lending pool — leading Igamberdiev to the addresses.

One in particular caught the researcher’s interest. Within two weeks of the collapse of Terra, the address received $15 million and repaid Block Tower, with an extra $10 million thrown in. The address invested $150,000 in crypto trading platform Tonic Dex. Then, it borrowed $25 million and deposited the funds into a Coinbase wallet.

This Coinbase wallet has only been used once before: when it received 84.5 million USDC from ‘Wallet A’ right after it made the swap that destabilized the UST/3CRV Curve pool, triggering Terra’s depeg.

Read more: How did so many Jane Street traders wind up at FTX?

Igamberdeiv argues that since this Coinbase wallet has only been interacted with twice — first the 84.5 million deposit by Wallet A and then a $25 million deposit by Jane Street — it’s “highly likely to belong to the same entity.”

Whether or not Jane Street intended to depeg UST remains unclear. The firm has been rumored to have participated in Terra’s attempted bailout, along with Jump Crypto and Celsius. “Given that Wallet A had their UST on Anchor for a month, it wouldn’t necessarily mean that Jane [Street] had malicious intent,” Igamberdiev wrote.

“However, we’d love to hear about Wallet A from them.”

Protos has reached out to Jane Street and will update this piece should we hear back.

For more informed news, follow us on Twitter and Google News or subscribe to our YouTube channel.

The post Researcher ties Jane Street to notorious ‘Wallet A’ that helped depeg UST appeared first on Protos.

South Korean officials traveled to Serbia earlier this month as they stepped up their pursuit of elusive former Terra chief Do Kwon.

As reported by Bloomberg, the delegation included a member of Seoul’s prosecutors’ office and a senior Justice Ministry official.

It’s thought they traveled to the Balkan state to seek help in catching up to the crypto-boss-turned-fugitive. Kwon has been on the run since the Terra (LUNA) ecosystem imploded in May last year, taking a raft of digital assets and crypto-related organizations with it.

South Korean authorities issued an arrest warrant just four months later but by then, Kwon was already long gone.

Serbia is the perfect place to lie low

In December, multiple reports claimed that Kwon had been spotted in Serbia. And, as previously reported by Protos, that’s a location that makes perfect sense.

Serbia is one of four countries that border Kosovo — which just happens to be one of the only places without representation at Interpol. The organization issued a red notice for Kwon just two weeks after South Korea’s arrest warrant.

Serbia and South Korea have signed no extradition treaty but they have both agreed to the European Convention on Extradition – meaning that Kwon could be handed over by Serbia. Despite this, things could still get complicated.

Read more: What could Terra founder Do Kwon be getting up to in Serbia?

Seung Jae-Hyeon, researcher at the Korea Criminal Justice Policy Institute, said in December: “Extraditions need to be mutually beneficial. Serbia is still an unprecedented nation in this regard.

“If there is no incentive for Serbia, South Korea will need to exercise public power to secure extradition. It seems that it will be difficult to extradite [Kwon] in a short period of time.”

Words in bold are our emphasis. For more informed news, follow us on Twitter and Google News or subscribe to our YouTube channel.

The post Top South Korean officials follow fugitive Do Kwon to Serbia appeared first on Protos.

On September 13, roughly four months after the complete collapse of algorithmic stablecoin terra and crypto token luna, South Korean authorities issued a warrant for founder Do Kwon’s arrest. Lo and behold, he was nowhere to be found.

Kwon left to Singapore before legal action could be taken against him regarding the thousands of investors now left empty-handed. To quiet down speculators, he tweeted on September 17 that he was not, in fact, on the run. He filmed interviews — for media outlets that he financially backed — in which he suggested the move to Singapore had always been the plan. 

“​​For any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,” a tweet read.

Less than two weeks after South Korea issued its arrest warrant, Interpol released a Red Notice. This was sent to all 195 member states and requested that local authorities bring in Kwon; the only countries and territories not included are North Korea, Taiwan, Palau, Tuvalu, Kosovo, and Western Sahara.

In December, Kwon was spotted by authorities in Serbia after appearing in Dubai, leaving some wondering why he chose to go there. Only, Serbia is a much more likely place for a crypto fugitive like Kwon to ensure they remain hidden.

Kwon fleeing to Serbia makes more sense than Singapore

Compared to South Korea, Singapore adopts friendlier regulatory policies and a state-sponsored investment fund, Temasek, which has backed several crypto projects. But it appears the country wasn’t friendly enough.

When exactly the Terraform Labs founder decided to depart Singapore is unclear. The time frame further coincides with the filing of a $57 million class action lawsuit against him in the country’s High Court, which was due at his doorstep any day.

It looks like he put some thought into where he would land next.

Serbia, where he was last reported to be located, is one of four countries that border Kosovo — which happens to be one of the only places without representation at Interpol. Serbia and South Korea have never signed an extradition treaty, yet have both agreed to the European Convention on Extradition. Meaning, Kwon would absolutely meet the criteria to be handed over by Serbia.

But there are other factors that make Kwon’s return less likely. Seung Jae-Hyeon, a researcher at the Korea Criminal Justice Policy Institute, said in an interview with Chosun Ilbo: “Extraditions need to be mutually beneficial. Serbia is still an unprecedented nation in this regard.

“If there is no incentive for Serbia, South Korea will need to exercise public power to secure extradition. It seems that it will be difficult to extradite [Kwon] in a short period of time.”

In Serbia and neighbouring countries, rules and regulations are possibly sidelined if you have enough cash and the borders allow for easy transit, making it likelier for a fugitive to make a getaway if need be. Serbia lies upon the Balkan Route, a known passage for trafficking drugs like cocaine and other illicit goods. In 2022, over 145,600 migrants made “irregular border crossings” into the EU via the Balkan Route, an increase of 136% compared to the previous year.

Black markets have thrived for decades, ever since the Bosnian and Kosovo Wars and the fall of genocidal dictator Slobodan Milošević. The economies of Bosnia and Herzegovina, Montenegro, Kosovo, Albania, North Macedonia, and Serbia are largely cash-based, leaving fewer digital footprints.

Read more: FTX probe has feds wondering if SBF brought down Terra

Getting cash in the first place might not be an issue, either. Serbia’s pro-crypto politics make it possible for a fugitive with a large amount of crypto to become liquid when need be. As Lee Hong-yeol, a former South Korean prosecutor, told Chosun Ilbo: “Serbia is a country that takes a positive stance toward many cryptocurrency-related matters. Last year, it legalized crypto trading, while mining activities are carried out with the active support of the government. Kwon seems to have chosen the country in an attempt to protect his funds.”

Kwon may find that local police are too busy with cases of Serbian crypto fraud to assist in his arrest. Last week, a €2 million crypto call center crime ring was taken down in Serbia, Bulgaria, and Cyprus by a cross-border operational taskforce supported by Europol. Fifteen arrests were made: 14 in Serbia and one in Germany. Investigators searched 22 locations, 15 of which were in Serbia, and found three hardware wallets with roughly $1 million in cryptocurrencies on it.

That said, the multimillion-dollar crackdown suggests that authorities are getting better at working across borders and agencies in order to safeguard cryptocurrency investors and capture fraudsters. Serbia, or anywhere for that matter, may not be a safe haven for long.

Kwon’s proof of life

After Reuters broke the news that Kwon had fled to Serbia, the normally boisterous, confident, and prolific tweeter went silent. He didn’t post for one month, until he sent out a single exclamation point “!” on January 9, in response to someone pointing out his radio silence.

Since then, reports of Kwon’s whereabouts are unclear. He may no longer be in the country.

When Protos reached out to Interpol, it replied that it “does not comment on specific cases or individuals.” It remains to be seen if Kwon decided to stay in Serbia or went to a neighbouring country. Perhaps he’ll join Zhu Su, Kyle Davies, and Mark Lamb way out in the United Arab Emirates.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

The post Why Serbia makes sense for crypto fugitive Do Kwon appeared first on Protos.