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.

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

While many early LUNA investors have made no secret of their links to the infamous Ponzi – Mike Novogratz literally got a tattoo of the scheme on his arm — others have preferred to fly slightly more under the radar.

Unfortunately for them, despite their best efforts, in April a Securities and Exchange Commission (SEC) expert witness managed to compile an exhaustive list of everyone who was able to acquire LUNA at a discount — most for $0.10 a token.

Here, Protos has collected details about some of the better and lesser-known individuals involved in this early sale. All of the purchases listed below occurred between July and September of 2018 until otherwise specified.

It’s important to understand why Protos is publishing details about these early investors in LUNA.

We’re not suggesting that any of these individuals are guilty of anything nor implicating them in Do Kwon and Daniel Shin’s spiderwebs of lies and fraud. Instead, it’s more to shine a light on who was approached to be an early part of LUNA and who was so taken by Do and Shin’ pitch of an algorithmic stablecoin offering insane yields that they did little-to-no real due diligence.

It’s also important to realize that many of these individuals aren’t victims at all — likely selling their tokens long before the collapse of the scheme. They’re likely highly educated and/or wealthy people who were blinded by a fear of missing out on the next big crypto opportunity.

Hwisang Kim

At the time Hwisang Kim invested $3 million for 30 million LUNA tokens, he was chief investment officer of Hashed, a blockchain fund that received over $30 million from SK Group (the second largest conglomerate in South Korea after Samsung).

Polychain Fund 1 LP

Polychain Fund 1 was the first fund created by Polychain Capital, an investment firm started by Olaf Carlson-Wee, who was the first employee of Coinbase and its head of risk management. Investors in Polychain include a16z and the Founders Fund. The firm acquired 30 million LUNA tokens.

Binance Marketing Services Ltd.

In what was likely less of a purchase and more of a ‘quid pro quo,’ Binance Marketing Services Limited was able to acquire 30 million LUNA tokens for $3 million dollars — but whether any money exchanged hands or the tokens were instead for Binance to market make is unclear.

Dunamu & Partners

The investment arm of Dunamu, the Korean company that created UpBit, an early cryptocurrency exchange established in 2017, acquired 20 million LUNA tokens.

TransLink Capital Partners IV, L.P.

A fund operated by TransLink Capital, a VC fund located in Palo Alto, CA. The IV LP fund raised $180 million, of which $2 million went toward LUNA. The fund acquired 20 million LUNA tokens.

Read more: Here’s how crypto’s third largest stablecoin Terra (UST) collapsed

Kakao Investment Co., Ltd.

The investment arm of South Korean company Kakao — largely known for being the most popular social media and chat app in South Korea — acquired 10 million LUNA tokens.

P2PPE

A now-dissolved UK company that was run by two Chinese nationals, Shuoji Zhou and Jingda Yan. Shuoji Zhou is co-founder of FBG Capital which was described as a ‘flipper‘ meaning it got quickly into and out of numerous ICO investments in 2017.

Jingda Yan is a finance professor in Beijing. The duo paid $1 million for 10 million LUNA tokens.

Arrington XRP Capital Cayman SPV, LTD.

The Cayman Islands arm of Arrington XRP Capital is operated by Michael Arrington, who became well-known in the ’90s for starting TechCrunch and who has since become a vocal proponent of XRP. His Cayman investment arm acquired 10 million LUNA tokens.

Cherubic Ventures Advisors Ltd.

An investment arm of Cherubic Ventures, a VC firm established by Matt Cheng and based out of Taiwan. The firm acquired 10 million LUNA tokens.

Nirvana Capital Ltd.

A Beijing-based cryptocurrency investment firm started by Alfred Jiang. Jiang was able to acquire 10 million LUNA tokens.

HOF Capital GGI Fund Tokens, LLC

The Cayman Islands investment arm of HOF Capital listed Daniel Shin, co-founder of LUNA/Terra, as a Venture Partner until the collapse. The firm acquired an auspicious 9.999 million LUNA tokens.

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

Huobi Capital

Now known as HTX Ventures following Justin Sun’s involvement, Huobi Capital acquired 7.5 million LUNA tokens.

1kx LP

1kx is a German VC fund that’s been a massive investor in cryptocurrency and web3 companies since 2017. It acquired 5 million LUNA tokens.

Kenetic Capital SP1 Unlimited

Kenetic Capital SP1 Unlimited is a fund operated by Kenetic Capital, a Hong Kong-based proprietary trading and VC investment firm that made numerous investments into BlockFi and also invested in FTX. It acquired 5 million LUNA tokens.

Monex Group, Inc.

Monex Group is a Japanese financial services company that purchased a popular crypto exchange called Coincheck in 2018. Coincheck is currently seeking a listing on NASDAQ. Monex Group acquired 4.6 million LUNA tokens.

BONGGUN BAE

Likely a misspelling of Bongun Bae, a South Korean executive currently working on web3 gaming through a company called NPIXEL. Bongun Bae was able to acquire 4.4 million LUNA tokens.

Divergence Digital Currency LP

The founder of Divergence Digital Currency (DDC) — now a part of Struck Capital — Adam Struck, sued one of his employees at DDC, Yida Gao, for defrauding him. The fund acquired almost 4 million LUNA tokens.

Read more: A complete timeline of Celsius’ relationship with Terra LUNA and Tether

Jack Abraham

Abraham is well known for founding telehealth company Hims & Hers but was also a loud proponent of LUNA/Terra — especially in an interview with Anthony Pompliano. He also stated in the Pompliano interview that from a regulatory standpoint, he’s worried about pursuing crypto. Abraham acquired 3.5 million LUNA tokens.

Digital Asset Capital Management Inc.

LUNA was one of the first investments made by BVI-headquartered Digital Asset Capital Management (DACM), an investment firm that almost exclusively invests in crypto.

Run by co-founder Richard Galvin, the CEO bragged in a video interview with Cointelegraph about how well his firm was able to trade LUNA. DACM acquired 2.5 million LUNA tokens.

BGT Issuer Ltd.

A BVI-domiciled fund with headquarters supposedly in Singapore. It entered into voluntary liquidation in the BVI in 2022. BGT Issuer acquired 2.5 million LUNA tokens.

Coefficient Group Holding Ltd.

It’s unclear what Coefficient Group does and its internet footprint — including a website that doesn’t explain anything — is minimal. The company is UK-based and was apparently founded by a chartered financial accountant. Coefficient Group acquired 2.5 million LUNA tokens.

Read more: Jump Crypto profited from Terra Luna as investors lost billions

WXY Consulting Pte. LTD.

The apparently now-defunct consulting agency was based out of Beijing but had a business address in Singapore. Other clients involved with the firm include FTX and KuCoin, with Huobi (now HTX) being listed as an investor.

Its former website is now blank but states it’s connected to Xinzhou Jiuzhong Medical Technology Co., Ltd. In all likelihood, WXY received 1.7 million LUNA tokens as a form of sweat equity.

Karisa Anne Sukamoto

A former Singaporean beauty queen and fashion designer who acquired 1.5 million LUNA tokens.

Masa Kakiya

Currently the head of business development in Japan for web3 gaming company Immutable, Kakiya once worked for cryptocurrency company ConsenSys. He acquired 1.5 million LUNA tokens

The Tenev Living Trust

The Tenev Living Trust is a private investment holding for Vladimir Tenev, the CEO and co-founder of Robinhood Markets, a major brokerage firm. Tenev had Do Kwon on his podcast Under the Hood to discuss ‘a brave new system‘ of spinning up FinTech apps like websites — the episode has since been deleted. Tenev acquired 1 million LUNA tokens.

Loi Luu

Singaporean founder of a decentralized cryptocurrency exchange called KyberNetwork and now working on a web3 VC fund called Caliber. Luu received 1 million LUNA tokens.

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

GBIC LLC

A New York-based crypto investor with a footprint in South Korea and China. GBIC was also an early investor in FTX and was able to acquire 1 million LUNA tokens.

Stefano Schiavi

An investor and entrepreneur focused on blockchain and cryptocurrency solutions, Schiavi used to run a now-defunct Seoul-based ‘not-for-profit’ called Not For Sale. He acquired 1 million LUNA tokens.

David Lee

A professor at Singapore University of Social Sciences and a one-time visiting scholar at Stanford University who acquired 1 million LUNA tokens.

Milojko Spajić

According to regulators in Montenegro, the country’s current prime minister never submitted the required paperwork declaring that he had purchased 750,000 LUNA tokens in 2018. He repeatedly lied to the public, claiming that the tokens were purchased for a Singaporean firm he was employed by called Das Capital.

Rumors of Spajić’s close connections to the founders of LUNA have abounded since Do Kwon chose to flee to Montenegro after being issued a red notice by Interpol and being wanted by South Korean and US authorities.

Read more: Somebody extradite Do Kwon already

Oh Eng Bin

A senior partner at Dentons, the largest global law firm. Oh Eng Bin operates out of Singapore, leads Dentons’ blockchain focus, and acquired 600,000 LUNA tokens.

Jon Choi

Choi is a Harvard graduate who was involved with the Ethereum Foundation and created a now-defunct app to share outfits. He acquired 500,000 LUNA tokens.­

QCP Capital

The investment arm of Singaporean digital asset trader and market maker QCP Group acquired 500,000 LUNA tokens.

Read more: Montenegro court set to decide on Do Kwon extradition… again

Dongwon Kim

A South Korean former director at Bithumb and cryptocurrency consultant. He acquired 2 million LUNA tokens.

There were also many early investors named by the SEC that weren’t included in our list. Some of these individuals were difficult to identify and others contributed less than significant amounts to the pre-sale.

The most puzzling name listed was Northgatestars, which acquired 2.5 million LUNA tokens in July of 2018, while the individuals who contributed the most that we were unable to positively identify were Younghoon Moon (acquired 4.5 million LUNA tokens), Sung hun Park (acquired 4.48 million LUNA tokens), Siwon Lee, (acquired 4.4 million LUNA tokens), and Jonyong Park (acquired 3 million LUNA tokens).

Late Stage

Below are a number of large-scale investors who put money into LUNA between late 2019 and June of 2021. It isn’t known what kind of discount they received on these purchases or what contractual agreements were signed:

Galaxy Digital Trading HK Ltd.

Mike Novogratz’s company famously dumped $4 million into LUNA in 2020.

Pantera Digital Asset Fund LP

Pantera Capital is one of the more well-known cryptocurrency funds in the industry, famously struggling due to its investment in FTX. It poured $1.7 million into LUNA in 2020.

Blockchain Ventures Fund I LP

This is the venture arm of Blockchain (dot com). Blockchain spent $1.3 million on LUNA in 2021.

Accomplice Blockchain Two Ltd.

Accomplice Blockchain is a Boston-based crypto investment firm run by Jeff Fagnan. It spent $600,000 on LUNA in 2020.

ACCII Offshore Blocker Ltd.

This fund created by Balancer Labs, a non-custodial portfolio manager, liquidity provider, and price sensor, put $600,000 into LUNA in 2020.

DZG Investment Trust

This is a fund controlled by a ‘David Z. Galpin,’ who put just under $300,000 into LUNA between 2019 and 2020.

Read more: Do Kwon appeal claims lawyers had 20 mins to review docs before hearing

Be careful, it turns out everyone — from the most sophisticated venture capital investors, professors at world-class universities, and political luminaries, to CEOs of some of the largest companies on Earth — can easily be fooled by charisma, big numbers, and hype.

Currently, Do Kwon remains in a Montenegrin existential crisis, a Schrödinger’s Kwon that means despite the multi-billion-dollar financial criminal tied to the current prime minister, he can’t be extradited to both South Korea and the US.

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 The high-profile LUNA investors — from prime ministers to beauty queens appeared first on Protos.

Security violations charges against Terraform Labs co-founder Daniel Shin have been dismissed by a South Korean district court, which further deemed that the firm’s native token luna was not a security.

This latest ruling is markedly decisive compared to previous court discussions. “It is difficult to see Luna Coin as a financial investment product regulated by the Capital Markets Act,” a translation of the court ruling reads. Previous court hearings regarding luna have shown authorities on the fence, stating that there was room for debate in the law, and “it is questionable whether the Capital Market Act can be applied.”

The decision that Shin didn’t violate securities law came as a response to an appeal filed by prosecutors to not dismiss an arrest warrant and confiscation of property for Shin. Co-founder Do Kwon is currently detained in Montenegro on charges of document forgery. South Korean authorities are looking to extradite Kwon — but the US is also battling for its own extradition.

Read more: Do Kwon sent law firm millions of dollars before Terra crash

Shin’s lawyer said, “The court rejected all of the prosecution’s 10 or so requests for arrest warrants against former CEO Shin and others involved in this case, consistently ruling that there is room for dispute on whether or not the Capital Markets Act was established.

“It can be seen that the court judges that it is difficult to view luna as a financial investment product.”

The implications of the South Korean court’s decision mean that, moving forward, prosecutors must argue that the pair are guilty of fraud and breach of trust rather than violating the country’s Capital Markets Act. 

However, the US Securities and Exchange Commission (SEC) has charged Terraform Labs and Kwon for violating national securities law. As noted by attorney Koo Tae-eon, however, “This is not the judgement of the US judiciary, but the SEC’s argument,” and therefore is still subject to dispute in court.

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 South Korea court says Terraform Labs’ crypto token Luna wasn’t a security appeared first on Protos.

According to a new independent report, Luna Foundation Guard (LFG) transferred more than 52,000 bitcoin (BTC) from its reserves to Jump Trading as part of its efforts to defend the price of terraUSD (UST). However, observers have already started to point out that there are certain, crucial details missing.

The report by third-party auditing firm, JS Held, was commissioned by LFG, it says, to answer a number of questions, namely:

• Were any LFG funds misappropriated, embezzled, or stolen?
• Were any LFG funds used to benefit insiders?
• Does LFG hold funds other than its publicly declared wallets?
• Were any of LFG’s funds frozen?

The 31-page document details how LFG spent $2.8 billion trying to save UST and how Terra developer Terraform Labs spent around $613 million trying to prop up the failing coin.

Their efforts were ultimately in vain, however, and the entire Terra ecosystem imploded in May.

Despite the details about LFG and TFL’s spending, as pointed out by Twitter user FatManTerra, the audit raises a number of questions.

For starters, the report says that no funds were taken by insiders, but there’s no explanation as to why 47,189 BTC was given to Jump. Indeed, there are no details regarding Jump’s trades at all (this is also referenced in the report’s small print).

Tweeting about this anomaly, FatMan said: “TFL sends Jump BTC, and Jump sends TFL UST… That’s it. No trade logs for this tranche! There are several issues here, as Jump was heavily involved in the Terra ecosystem and could have simply cleaned up their own book. Despite claiming full transparency, this part is omitted,” (our emphasis).

Read more: Jump Crypto forced to save Solana with $320M bailout of its own company

Jump founder also sits on LFG council

The fact that Jump Trading was used by LFG to do its BTC trades is particularly noteworthy, not least of all because Kanav Kariya, a member of the LFG governing council, is one of the two co-founders of Jump Crypto, Jump Trading’s crypto-specific arm.

Jump has also previously been embroiled in major token-related controversies. Back in February, the company paid $320 million to bail out its own token bridge Wormhole when hackers exploited a bug to mint hundreds of millions of dollars worth of Solana-based Wrapped ether (WETH) without posting the required ether collateral.

And this week, Protos reported how investors in Robinhood fear that the fallout from the collapse of Sam Bankman-Fried’s exchange FTX could affect trades being processed by Jump Crypto.

As a result, Catherine Wood’s Ark ETF Trust has disclosed $10 million in Robinhood share sales in favor of $21 million purchases of Coinbase shares. JP Morgan has downgraded Robinhood from Neutral to Underweight.

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

The post LFG audit raises questions about Jump Trading and Terra collapse appeared first on Protos.

TerraForm Labs (TFL) chief Do Kwon says he doesn’t care that much about money amid claims that he cashed out nearly $3 billion worth of crypto in the lead-up to his ecosystem’s spectacular crash.

The Terra (LUNA) and TerraUSD (UST) co-founder was accused by self-styled Terra insider, FatManTerra, of siphoning off $2.7 billion in 33 monthly withdrawals of $80 million each.

According to a lengthy Twitter thread posted on June 11, Kwon used Abracadabra’s Degenbox protocol, which allowed him to cash out the coins without affecting the doomed stablecoin’s peg.

However, the notoriously no-nonsense Kwon hit back, calling the accusations “categorically false” and warned that spreading inaccurate information just makes things worse for those who lost out when LUNA and UST went under.

Read more: Terra founder Do Kwon ordered to comply with SEC subpoena

Kwon also said that the accusations contradicted claims that he still owned most of his LUNA through an airdrop.

Kwon says he only took cash salary

In his response thread, Kwon also laid out exactly how he was paid by TFL, denying that he has taken anything but a regular wage from the South Korea-based company.

“For the last two years the only thing I’ve earned is a nominal cash salary from TFL,” protested Kwon.

He also claims to have deferred taking most of his founder’s tokens because he didn’t need to and to avoid inviting what he called “unnecessary finger-pointing” or claims that he “has too much.”

Kwon and TFL are currently subject to an investigation by South Korean prosecutors after five investors who lost a combined $1.1 million made claims of fraud and a breach of financial regulations.

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

The post Do Kwon says money isn’t his thing amid claims he pocketed $3B in crypto appeared first on Protos.

A US Second Circuit court has rejected Terra founder Do Kwon’s plea to ignore the SEC subpoena he was served last year. A process server handed court documents to the founder of the controversial crypto firm Terraform Labs on an escalator at a conference — in a way he deemed unlawful. Kwon sued the SEC, however, the court ruled on Thursday that service as valid. Kwon must now comply with its orders.

The SEC handed Terra’s CEO Do Kwon with a paper subpoena at the 2021 Messari Mainnet conference in New York. Kwon claimed the manner in which it was given violated his due process rights as well as the SEC’s own rules.

In addition to rejecting these claims, the panel snubbed Kwon’s rebuttal that he cannot face legal charges in the US because he is a South Korean citizen residing in Singapore. The court ruled that Terra has US customers, investors, and business operations, granting the SEC sufficient jurisdiction.

Kwon had also blamed the SEC for not obtaining permission from his counsel regarding serving him paperwork. The court rejected that bid.

Kwon’s lawyers had been in contact with the SEC, but the South Korean was not cooperating with the Commission’s orders.

Read more: A complete timeline of Celsius’ relationship with Terra LUNA and Tether

SEC subpoena applied to Terra’s Mirror Protocol

Originally, the SEC sued Kwon and Terraform Labs for its Mirror Protocol which facilitates synthetic assets, so-called mAssets, that “mirror” the price of US equities traded on US stock exchanges.

Months after the SEC’s investigation started, Terra’s flagship ICO, LUNA, and its sister stablecoin, TerraUSD (UST), collapsed. Investors lost tens of billions of dollars in market capitalization across Terra’s ecosystem, making the event crypto’s largest loss to date by dollar figure.

Initially, the SEC’s probe was to determine whether Terra and Kwon had breached federal law by allowing the trading of synthetic US stocks like Amazon, Apple, and Tesla.

The investigation is among the SEC’s efforts to regulate crypto and crack down on crypto scammers.

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

The post Terra founder Do Kwon ordered to comply with SEC subpoena appeared first on Protos.

Look at almost any market right now and you’ll see it in free-fall: stocks, commodities, and tech have all taken hard hits. But no industry has suffered such a fast loss of capital and confidence quite like cryptocurrency has over the past weeks.

Many believe the crash came at the hands of one stablecoin protocol and its extremely cocky founder: Luna and Do Kwon. Only, it’s not so simple.

At its peak, Luna and its stablecoin sister-asset TerraUSD had a combined market cap of nearly $80 billion. Real money from real venture capital firms — such as Binance Labs, Jump Trading, and Celsius Network – poured into the stablecoin with absurd and impossible returns promised.

When I tried to explain this to a friend not familiar with stablecoins, they asked me an obvious question: “So, all these big firms and smart investors put money into a stablecoin promising 20% returns. Why?”

The answer I gave was greed. Stablecoins should never promise massive returns; it shouldn’t be a part of their adoption strategy. Yet it undoubtedly was, for Luna, TerraUSD, and many others like them.

What occurred with Luna and its stablecoin wasn’t down to bad code, unnoticed attack vectors, or a complex hack — it was an unchecked money grab. Now, it appears that those who came out on top want to just move on.

Luna’s crash may cause side effects like amnesia

The Ponzi-like aspects were evident before the inevitable crash. A few skeptics spoke out, but many wealthy individuals who knew exactly what was going to happen with Luna and TerraUSD kept silent — or worse yet, listed the Ponzi-like assets on their cryptocurrency exchanges.

After Luna’s crash, these same people were the first ones to attempt to distance themselves in any way possible. Binance, the largest and most liquid cryptocurrency exchange in the world, owned and operated by Changpeng Zhao, was a first round investor in Luna (via Binance Labs). It’s hard to imagine that Zhao didn’t “know it too well,” as he conveniently later claimed.

Meanwhile, Sam Bankman-Fried, the founder of FTX, disagrees with comparisons made between Kwon and Elizabeth Holmes. Why? Well, according to Bankman-Fried, it’s because everyone knew Luna was a Ponzi doomed to crash from the outset, whereas Holmes was committing outright fraud by purposely deceiving Theranos investors.

That’s a very nice way of self-characterizing the role that exchanges and venture capital firms played in pushing the Ponzi up, up, and away.

Learn before you build

Building, or “buidling,” is commonly heard among crypto advocates and developers. The idea is that if you pause to criticize or reflect, you’re wasting time better spent working on solutions.

However strange to think, it seems as if the entire industry is gaslighting itself — attempting to persuade there’s no need to stop and contemplate the systemic risks of the current markets, the exchange owners who retain immense power, or the Ponzi schemes that are heralded by some of the most well-known people in the industry. Not to mention the countless people losing their mortgages or life savings.

The response from the industry to Luna’s crash was the same as it’s always been in the wake of a scandal: Well, the rest of us aren’t like that scam.

It’s astounding to me that people who claim to be building legitimate projects aren’t more incensed that unheard sums of cash went to an inherent out-and-out failure as opposed to them.

Read more: Luna 2.0: It came, they sold, it tanked

Multiple billions of dollars have been poured into a stablecoin doomed by its very nature to fail instead of into projects that could benefit any number of worthy causes. It should make you angry. It should make someone trying to build in the crypto space enraged.

Skeptics and critics alike, on the other hand, have reacted with a misplaced but well-intentioned “I told you so,” meant to simply teach a lesson — which can understandably cause a similar reaction of rage. I know I’m guilty of this too (and I’m sorry!) but I hope that moments like this lead to education, bridge building, and understanding.

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

The post OPINION: Time to learn from Luna’s crash before building anew appeared first on Protos.

Recipients of Do Kwon’s revamped Luna reportedly tanked the token just hours after launch as they scrambled to recoup losses caused by the original currency’s devastating crash earlier this month.

On May 27, Terraform Labs hard forked its failed blockchain, giving birth to the so-called Luna 2.0. The original Luna has since been rebranded as Luna Classic (LUNAC).

However, many recipients flipped their tokens at the earliest possible opportunity, causing it to plummet 70% from its launch price of $18.87. At the time of writing, it stood at $9.32.

This is despite the fact that users could only sell 30% of their promised coins.

Last week, Protos reported Terra’s delayed payout process: 70% of traders’ coins would be subject to a two-year vesting period with a six-month cliff. This was likely a poor attempt to prevent the mass sell-off that Terra foresaw, but which occurred nonetheless.

The new LUNA tokens were dished out depending on the size of wallets pre- and post-crash, also taking into account those burned by staking with Anchor.

Terra previously shared details about the breakdown of Luna payments, specifying that:

• 30% will be retained for the community pool.
• 35% will go to pre-crash LUNA holders.
• 10% will be set aside for pre-crash Anchor-staked UST holders.
• 10% will be handed to post-crash LUNA holders.
• 15% is earmarked for post-crash UST holders.

Read more: Crypto exchanges welcome Luna 2.0 but holders face two-year token wait

When Luna’s relaunch was announced, it didn’t take long for a number of prominent exchanges to pledge their support and share plans to list the token upon launch.

Among these were HitBTC and Huobi, while Binance confirmed that it would work with Terraform Labs to help users receive compensation.

Binance subsequently announced a multi-year airdrop, beginning on Tuesday, May 31, alongside its official listing of the token.

This news saw the struggling coin’s price rebound to $11.97 by 10:25 on Monday, however, despite this uptick it sits more than 50% down on its launch price, as of press time.

Curve protocol is where the de-pegging began

According to Nansen, despite various claims on social media about a single actor being responsible, a small number of holders likely caused the collapse. Among these was lending platform Celsius.

As reported by Bloomberg, Nansen also identified the Curve protocol as Ground Zero for UST’s de-pegging.

In research published on May 27, the blockchain analytics firm said that, “the de-peg of UST could instead have resulted from the investment decisions of several well-funded entities.”

According to Nansen’s research note, a back and forth battle between UST inflows and outflows clicked into gear in early May:

• A wallet associated with the Luna Foundation Guard (LFG) withdrew 150 million UST from Curve.
• About 85 million UST from one newly-created address was then moved into Curve.
• Four addresses – one associated with Celsius – then sent Curve around 105 million UST.
  

The LFG and other “peg defending” wallets responded by withdrawing 189.6 million UST and this dynamic continued into the following day.

According to Nansen and as reported by Bloomberg, two wallet addresses “significantly impacted the UST de-peg” and one of these was associated with Celsius.

The addresses took out around 420 million UST from Anchor in 15 transactions, and used the Wormhole bridge to transfer the funds into Ethereum. Nansen also called Celsius “a close counterparty that has sent and received funds” from another wallet, the activities of which led to the de-pegging.

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

The post Luna 2.0: It came, they sold, it tanked appeared first on Protos.

Several major crypto exchanges say they’re already planning to list Luna 2.0 after the Terra community voted overwhelmingly to support Do Kwon’s revival plans.

Terra’s DeFi ecosystem experienced a spectacular fall from grace when UST lost its dollar peg and Luna’s value was decimated. It had previously enjoyed an all-time high of $116.

But on May 27, Terraform Labs will fork its Terra blockchain and do away with algorithmic stablecoin UST after a massive 65.5% of the more than 300 million votes cast by Luna holders were in favor of Proposal 1623.

When the new Luna is launched, old tokens will become Luna Classic (LUNAC) and an airdrop of the new tokens will be handed out according to snapshots of user holdings before and after the crash. Specifically:

• 30% will be retained for the community pool.
• 35% will go to pre-crash LUNA holders.
• 10% will be set aside for pre-crash Anchor-staked UST holders.
• 10% will be handed to post-crash LUNA holders.
• 15% is earmarked for post-crash UST holders.

However, Terra holders won’t get all their new tokens on May 27. Most will receive 30% on the deployment of the new blockchain with the rest distributed over the following two-year vesting period with a six-month cliff — likely an attempt to disincentivize a large offloading event.

While many investors in Terra and the raft of DeFi projects with substantial exposure lick their wounds, several crypto exchanges have come forward with plans to list the new token.

Read more: Raoul Pal doesn’t want people to be angry after he appeared to hype Terra

HitBTC and Huobi have already confirmed that they will list the revamped Luna and the world’s largest crypto exchange Binance recently confirmed that it would work with Terraform Labs to help users receive compensation.

On Wednesday, Terraform Lab’s founder Do Kwon trashed reports that he went cap-in-hand to top Korean exchanges hoping to get his new token listed.

The initial rumblings of support could hint at another hype train similar to that enjoyed by Do Kwon’s DeFi project the first time around.

However, following the crash, previous Terra touters look to have stepped back from their support of the project. Despite now claiming to have never owned or understood Terra, Crypto guru Raoul Pal once told his followers that it was a “risk-free” investment.

Terra revival clouded by investigations 

While Kwon may have been able to replicate at least some of the buzz around his flatlining DeFi project, the impact of the crash was felt keenly across the crypto space.

Many investors who went all-in on Luna, or staked tokens on Terra’s Anchor protocol are still picking up the pieces. Indeed, police in South Korea have stepped up their presence around well-known suicide spots.

Minister of Justice Han Dong-hoon re-established and expanded the joint financial and securities crime investigation also known as the ‘Yeouido Grim Reaper.’ The team, which takes its nickname from Seoul’s financial district, was inactive for more than two years but its first new investigation target will be Terraform Labs.

Not to mention, rumors have surfaced about potential civil litigation from US investors burned in the crash. Terra researcher and serial tweeter @FatManTerra said that they had received information about a forthcoming class-action lawsuit.

The person behind the Twitter account later corrected that the unnamed law firm was preparing mass arbitration which can swamp a defendant with legal costs.

Read more: Crypto streamer arrested after failed Terra founder confrontation

However, another Twitter user claimed to have been feeding false information to the account which was then posted. “I don’t blame your skepticism but keep an open mind,” FatMan said in a reply to the detractor.

Protos has contacted both Twitter accounts and will update this story should they respond.

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

The post Crypto exchanges welcome Luna 2.0 but holders face two-year token wait appeared first on Protos.

As the dust settles on the collapse of Do Kwon’s “20% APY” Anchor protocol — which RealVision’s Raoul Pal called “basically risk-free” mere weeks before its collapse — many are now turning their gaze to the people who did business with Kwon. Step forward Celsius, a company led by a curious billionaire with even curiouser business dealings.

Celsius, which was one of Kwon’s largest financial connections — it once had $535 million in his Anchor Protocol — pays interest on popular crypto assets, allowing depositors to earn generous yields on their assets. Indeed, its flagship Earn account offers customers up to 17% APY.

Powering these generous yields — far above the paltry interest offered by traditional bank accounts — is Celsius’ native token, CEL. A $50 million ICO that briefly hit a $3.4 billion valuation, it has shed 90% of its market capitalization during the last 12 months.

Now fears are circulating regarding Celsius’ financial connections to the failed Terra LUNA stablecoin (UST), as well as the world’s largest stablecoin, Tether (USDT). (Celsius once paid interest on $1 billion worth of USDT.)

Reports are also surfacing about unresolved issues with securities regulators. Its CFO was previously arrested in connection with alleged fraud and money laundering. A few customers are simply afraid that the entire company has Ponzi-like characteristics.

Its CEL token has collapsed -75% in the last three months. So, as Celsius navigates the next few tumultuous weeks, people interested in Celsius’ history can find a complete timeline of events below.

History of Celsius and its founder Alex Mashinsky

1980-1982: Alex Mashinsky attends The Open University of Israel. He obtains a Bachelor of Engineering degree in Electrical Engineering.

1987-1989: Alex Mashinsky attends Tel Aviv University, majoring in Economics. He obtains a Bachelor of Science degree in Economics.

January 1995: Alex Mashinsky founds telecom exchange Arbinet.

August 1997: Alex Mashinsky founds Comgates.

January 2001: Alex Mashinsky founds Elematics.

February 2003: Alex Mashinsky founds Transit Wireless.

March 2003: Alex Mashinsky becomes a member of the Metro New York chapter of YPO.

January 2004: Alex Mashinsky sells Comgates to Telco Systems.

April 2004: Alex Mashinsky founds venture fund Governing Dynamics.

June 2004: Alex Mashinsky leaves Elematics.

2005: Alex Mashinsky becomes an advisor and angel investor at nSphere.

May 2005: Alex Mashinsky founds ride-sharing app GroundLink.

June 26, 2017: A patent is issued for a “System and method for IP bandwidth trading,” co-designed by Alex Mashinsky.

2010: Alex Mashinsky becomes an investor with Dubset Media Holdings.

May 25, 2010: A patent is issued for a system for VOIP efficient communications through networks, designed by Alex Mashinsky.

July 6, 2010: A patent is issued for a “System and method for faciliting targeted marketing over a communications system,” co-designed by Alex Mashinsky.

August 4, 2010: Transit Wireless signs deal with New York City to provide Wi-Fi and cell phone service in New York City’s subway system.

September 2010: Alex Mashinsky leaves Arbinet.

September 16, 2010: A patent is issued for a system for “Self-charging electric vehicles and aircraft, and wireless energy distribution system,” designed by Alex Mashinsky.

December 21, 2010: A patent is issued for a “Method and system for facilitating trading,” co-designed by Alex Mashinsky.

May 17, 2011: A patent is issued for a system of “Online trading and dynamic routing of electrical power,” co-designed by Alex Mashinsky.

August 2011: Alex Mashinsky leaves nSphere.

September 2011: Alex Mashinsky leaves YPO.

February 2013: Alex Mashinsky joins Tellabs as a board member.

December 2013: Alex Mashinsky leaves his position as a Tellabs board member.

December 2013: Alex Mashinsky leaves his position with GroundLink.

April 2014: Alex Mashinsky joins Inseego Group (formerly Novatel Wireless) as CEO and board member.

November 2015: Alex Mashinsky leaves his position at Inseego Group.

May 10, 2016: A patent is issued for a “System and method for managing multimedia communications across convergent networks,” co-designed by Alex Mashinsky.

July 4, 2017: A patent is issued for a system for “Intelligent routing of electric power,” co-designed by Alex Mashinsky.

March 16, 2018: Celsius Network launches crypto-backed lending platform.

March 23, 2018: Celsius Network announces a deal with Invox Finance to offer 9% APY loans to businesses.

August 2, 2018: Hub Token deposits thousands of Ethereum with Celsius Network.

August 7, 2018: Celsius Network announces a deal with Lightyear.io to provide lending and borrowing services for ICOs on the Stellar (XLM) blockchain.

August 18, 2018: W. Scott Stornetta joins Celsius Network’s Board of Directors.

September 21, 2018: Celsius Network becomes a founding member of the United Nations Sustainable Development Goals Impact Fund.

October 16, 2019: Celsius Network integrates TrustToken’s fiat currency-backed stablecoins.

October 15, 2018: Ann LaCarrubba joins Celsius Network as General Counsel.

October 31, 2019: Celsius Network adds EOS to its interest-earning platform.

February 19, 2020: Celsius Network integrates Simplex to provide credit card processing for purchases of digital assets.

February 27, 2020: Celsius Network taps Stonehenge Global Fund Administration to support crypto fund management.

March 9, 2020: Celsius Network selects Prime Trust to provide deposit security.

March 26, 2020: Camilla Churcher joins Celsius Network as Head of Business Development.

March 30, 2020: Celsius Network selects Chainlink (LINK) to provide blockchain oracle services.

March 31, 2020: Celsius integrates Onchain Custodian for Asian clients.

April 13, 2020: Celsius Network reduces its minimum loan amount to $1,000.

May 5, 2020: Celsius Network adds Tether Gold (XAUT) to its interest-earning platform.

May 20, 2020: Celsius Network offers cash loans with 1% APY and surpasses 100,000 users.

June 4, 2020: Celsius Network surpasses $1 billion in assets under management.

June 11, 2020: Celsius Network launches fundraising round on BnkToTheFuture with a $15 million goal.

June 22, 2020: Tether is the lead investor in Celsius Network’s $10 million funding round.

June 23, 2020: Celsius Network adds Ethereum Classic (ETC) to Celsius’ mobile app, offering 8.33% APY to depositors.

July 15, 2020: BnkToTheFuture invests in Celsius Network funding round.

July 23, 2020: Celsius Network adds SEPA and ACH as payment options for buying digital assets.

July 24, 2020: Celsius Network closes an $18.8 million funding round.

July 29, 2020: Celsius Network adds Celsius Tokens to its list of digital assets that can be used as collateral for loans, bringing the total number of assets that can be used as collateral to 26.

September 21, 2020: Celsius Network adds support for Paxos’ PAX Gold (PAXG).

October 21, 2020: Celsius Network lowers its minimum loan amount to $500 and pre-approves 200,000 customers.

October 29, 2020: Celsius Network adds more Chainlink oracles.

November 24, 2020: Celsius Network donates 25,000 ETH to help fund Ethereum 2.0 development efforts.

December 9, 2020: Celsius Network hires Chainalysis to audit its assets.

January 24, 2021: Alex Mashinsky tells Bloomberg that corrections in bitcoin’s price are healthy and that he expects money to continue to go into bitcoin due to the Fed’s continued money-printing.

March 10, 2021: Celsius Network confirms more than $10 billion in assets under management.

March 12, 2021: Bittrex’s Global exchange lists CEL.

March 18, 2021: Bitfinex exchange lists CEL.

March 19, 2021: Rodney Sunada-Wong joins Celsius Network as Chief Risk Officer. Vijay Konduru joins Celsius Network as Chief Marketing Officer and Head of Analytics.

March 24, 2021: Celsius Network adds Apple Pay as a payment option for buying digital assets.

March 27, 2021: Attorney Ron Deutsch joins Celsius Network as General Counsel and Chief of Mergers and Acquisitions.

April 1, 2021: Celsius Network adds CoinShares’ wDGLD token to its yield platform.

April 18, 2021: Celsius Network announces a deal with Liquid to offer 15% APY to Liquid customers.

April 21, 2021: Carl Hua joins Celsius Network as Chief Architect for DeFi research and development.

May 6, 2021: Celsius Network teams up with B21 Crypto to launch a one-click yield platform, Earn.

May 20, 2021: A security auditing team grants Celsius Network ISO/IEC 27001 security certification.

May 24, 2021: Celsius Network launches a web app.

May 27, 2021: Celsius Network announces a sponsorship deal with NBA point guard Spencer Dinwiddie.

June 3, 2021: Celsius Network confirms 100,000 Bitcoin is deposited on its yield platform.

June 4, 2021: Celsius Network announces a $200 million investment into bitcoin mining, including the purchase of mining equipment and acquisition of a stake in Core Scientific.

June 4, 2021: Celsius Network signs a deal with iHeartMedia to distribute a podcast hosted by Alex Mashinsky.

June 22, 2021: Celsius Network acquires MVP Workshop.

June 28, 2021: Celsius Network adds support for Binance Coin (BNB), Polkadot (DOT), and Bancor Network Token (BNT).

July 8, 2021: Celsius Network launches yield verification tool Rewards Explorer.

July 15, 2021: Celsius Network and Horizon (ZEN) release a proof-of-reserve blockchain, zkAudit.

July 21, 2021: Celsius Network joins Michael Saylor’s Bitcoin Mining Council.

July 23, 2021: Celsius Network confirms a $54 million investment in mining company Core Scientific.

August 16, 2021: Celsius Network obtains a license to offer loans in California.

August 19, 2021: Celsius Network adds Anchorage Digital as a custodian for part of Celsius’ treasury.

August 24, 2021: Celsius Network announces $20 billion in assets under management.

August 30, 2021: Celsius Network reaches 1 million users.

September 29, 2021: Celsius Network drops the minimum loan amount in stablecoins to $100.

October 7, 2021: Bloomberg reports that Celsius pays an interest rate of 5-6% on loans of about 1 billion USDT.

October 19, 2021: Celsius Network publishes a statement claiming that it is working closely with regulators.

October 25, 2021: Celsius Network opens a loan support center.

November 21, 2021: Celsius Network CFO Moshe Hogeg is arrested in Israel on charges of defrauding investors, money laundering, and sexual assault.

November 23, 2021: Celsius Network opens a Customer Care Center in Las Vegas.

November 26, 2021: Celsius Network confirms that it suspended an employee who was arrested in Israel without naming the employee. It says no funds were misplaced or mishandled by the employee. (Alex Mashinsky later confirmed to Blockworks that Moshe Hogeg was suspended and denies any knowledge of Hogeg’s alleged crimes.)

January 13, 2022: Celsius Network adds support for Avalanche (AVAX).

January 14, 2022: Aslihan Denizkurdu joins Celsius Network as COO. Frank van Etten joins as Chief Financial Officer.

January 26, 2022: The SEC opens an inquiry into Celsius Network’s lending operations.

January 31, 2022: Celsius Network adds support for Dogecoin (DOGE).

February 7, 2022: Celsius Network invests in Polygon’s $450 million funding round.

February 7, 2022: Public Mint signs a deal with Celsius Network to broaden the offerings of Public Mint’s EARN product.

February 13, 2022: Celsius Network opens an office in Hoboken, New Jersey.

February 17, 2022: Jacob Avidar joins Celsius Network as Vice President of Engineering – Growth in Technology.

February 21, 2022: Cointelegraph places Alex Mashinsky at #64 on its list, The Cointelegraph Top 100.

February 22, 2022: Rod Bolger joins Celsius Network as CFO.

February 23, 2022: Celsius Network announces an NFT hackathon.

February 24, 2022: Celsius Network delegates $30 million of wrapped Ethereum (WETH) to Maple Finance’s crypto lending platform.

February 26, 2022: Alex Mashinsky tells Bloomberg he donated $10,000 in Ethereum to Ukraine in the wake of the Russian invasion.

February 26, 2022: Alex Mashinsky tweets Celsius Network-controlled addresses to which donors can send bitcoin and Ethereum donations. He claims donations will be sent to Ukrainian humanitarian efforts.

February 26, 2022: Celsius Network launches CelsiusX, a blockchain bridge infrastructure project.

March 3, 2022: Celsius Network gives $25 in ETH to each Ukrainian customer.

March 4, 2022: Celsius Network burns 82,304 CEL tokens.

March 18, 2022: Celsius Network announces a plan to expand its crypto hackathon series.

March 18, 2022: Celsius Network announces an investment in CoinRoutes’ $16 million Series B funding round.

March 24, 2022: Celsius Network sponsors France’s Paris NFT Day.

March 26, 2022: Alex Mashinsky denies rumors that Celsius Network is laundering or “peeling” money.

March 29, 2022: Celsius advertises a “limited time promotion” on new LUNA deposits, requiring a 90-day lockup.

March 30, 2022: Guillermo Bodnar joins Celsius Network as CTO.

April 5, 2022: Celsius Network hosts a booth at the Bitcoin Miami 2022 conference.

April 7, 2022: Celsius Network announces plans to support wrapped bitcoin (WBTC) on the Polygon network.

April 11, 2022: Celsius Network announces a ban on deposits with Earn from non-accredited U.S. investors starting April 15, 2022.

April 11, 2022: Celsius Network launches a Custody solution for U.S. customers.

April 13, 2022: Celsius Network files Form D (Notice of Exempt Offering of Securities) with the SEC.

April 15, 2022: MetaMask Institutional integrates Celsius Network subsidiary GK8.

April 20, 2022: Huobi Global lists CEL.

April 30, 2022: Alex Mashinsky announces his near completion of a new book detailing his vision for Web3.

May 1, 2022: Alex Mashinsky announces plans to launch new debit cards in June and September.

May 5, 2022: Celsius Network announces job openings in Atlanta, Georgia.

May 8, 2022: Alex Mashinsky gives a presentation, “The Future of DeFi and CeFi with Celsius,” at Chainlink’s Plugged-In conference.

May 11, 2022: Alex Mashinsky denies any involvement in a LUNA bailout in the wake of the TerraUSD and LUNA meltdown.

May 11, 2022: Alex Mashinsky denies any significant losses amid what he calls “extreme market volatility.”

May 16, 2022: Celsius Network files a Form S-1 draft registration statement for Celsius Mining, LLC, with the SEC, hinting at plans for an IPO.

May 18, 2022: Alex Mashinsky accuses “unknown malefactors” of attacking Celsius Network and Crypto.com’s CRO token.

May 19, 2022: Alex Mashinsky reiterates that Celsius Network had “minimal” exposure to TerraUSD and LUNA.

May 25, 2022: Celsius Network fails to post its regular, weekly report of its assets.

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

The post A complete timeline of Celsius’ relationship with Terra LUNA and Tether appeared first on Protos.