‘I Didn’t Sleep For 8 Days,’ Terra Luna Founder Do Kwon Tells Coinage Following Crypto Collapse

Do Kwon, founding father of Terraform Labs, lately spoke with cryptocurrency media firm Coinage in Singapore — his first media interview for the reason that collapse of Terra Luna earlier this summer season.

Here is what he mentioned:

Earlier than Terra collapsed, Kwon and Terraform Labs purchased billions of {dollars} in Bitcoin, trying to again the ecosystem’s stablecoin, UST, by a basket of belongings reasonably than simply Terra.

When requested about why Kwon determined to buy the bitcoin, he informed Coinage: “We felt that by including a number of types of collateral, beginning with bitcoin, UST had an actual likelihood to turn into the decentralized cash for all of crypto.”

Terra was a number one cryptocurrency value over $40 billion at its peak. Nonetheless, because the cryptocurrency markets turned south, UST depegged. In consequence, the LUNA token plummeted over 99.99% in a matter of days.

In an try and repeg UST to the worth of $1, Kwon tried to lift a last-minute funding spherical for $2 billion — days earlier than the tokens collapsed to just about zero. Many condemned Kwon for trying to lift these funds realizing that there could be no approach to reverse UST’s depeg.

“Once I tried to lift the spherical, It wasn’t a lot that I believed the peg could be irrecoverable,” he stated. “I’ve been by way of a number of of those crises earlier than and the peg all the time recovered.”

Following the collapse of Luna and UST, tales circulated about suicides after folks’s life financial savings had been vaporized from the crash. And there was no sight of Kwon on-line or in particular person. Many observers thought he went into hiding.

“After the chain halted, I spent a few days calling folks I’ve talked to within the terra neighborhood,” Kown stated. “The calls had been tough… For eight days, I didn’t sleep in any respect. Seven nights, and I solely ate half a burrito. Should you requested me what occurred throughout the day and what occurred at evening, I wouldn’t have the ability to inform.”

In the end, Kwon accepted blame for creating Luna and never foreseeing its vulnerabilities:

“Should you’re asking me if there was a mole at Terraform Labs, that’s in all probability a sure. Whether or not any individual tried to benefit from that exact alternative, that’s in all probability a sure. But when these alternatives existed, that’s on the one who supplied these vulnerabilities within the first place… that’s me.”

Simply final evening, Korean prosecutors raided the South Korea residence of fellow Terra Luna founder Daniel Shin. It’s doubtless Kwon and lots of different workforce members that constructed Terra Luna will face authorized repercussions not solely in Korea however throughout the globe.

UST was not like collateralized stablecoins as a result of it was backed by LUNA, one other cryptocurrency. When UST dipped under $1, arbitrageurs might buy UST and promote it for $1 of LUNA.

Nonetheless, when UST dipped under $1, a cascading impact despatched each LUNA and UST in a downward spiral. Because the LUNA token wasn’t backed by any arduous belongings, the worth of LUNA collapsed from over $85 to fractions of a cent, wiping out billions of {dollars} in capital in a matter of days.

By the tip of its life, over 80% of UST’s provide was deposited on Anchor Protocol. Sadly, its 20% APY was too good to be true, and as cryptocurrency markets turned bearish, the protocol was unable to assist these APYs and have become bancrupt. In a closing try to save lots of the UST-LUNA depeg, Kwon purchased over $3 billion value of Bitcoin to start to again the cryptocurrency by extra confirmed belongings. Clearly, the try to save lots of LUNA failed, because the UST stablecoin now trades at lower than three cents.