#luna Community Insights & Market Sentiment

Crypto’s Past 002. $40 billion evaporated in 72 hours. The person behind it had publicly mocked everyone who said it would collapse.

On May 7, 2022, someone withdrew $375 million in UST from Anchor.

Anchor was a savings protocol in the Terra ecosystem that paid around 20% annualized yield on UST deposits—a rate that was absurdly high at the time. The Fed was raising interest rates, and normal dollar yields were close to zero. Where was that 20% coming from? That question would be asked repeatedly later, but during those two years, almost nobody asked it.

The next day, UST fell below $0.99. Do Kwon tweeted that more funds were being deployed to stabilize it. On the third day, it fell below $0.95, and Terra’s Bitcoin reserves started being poured in—about $3 billion worth, which was quickly exhausted.

Then came the spiral.

As UST fell, the arbitrage mechanism began minting LUNA to absorb the selling pressure. The more it minted, the cheaper LUNA became; the cheaper it got, the more had to be minted. The supply grew from 340 million tokens to more than 6.5 trillion in just a few days. On May 13, its price was less than $0.0001.

It took 72 hours to fall from $80 to that level.

My take is that what’s really worth remembering about this wasn’t the algorithm’s design.

People had already clearly explained that the algorithm was flawed. UST relied on confidence, not reserves. Once confidence disappeared, the mechanism itself became an accelerant. Analyses like this had been published publicly as early as 2021, and they were more accurate than many post-collapse reviews. But few people paid attention at the time.

Do Kwon’s response was to mock them. One of his famous tweets said, in effect, that their positions were too small to talk to him about scale. He called his critics poor.

That was more than just arrogance. When a founder publicly ridicules people raising valid concerns, it shows he’s stopped hearing dissent. By that point, collapse is only a matter of time.

What followed happened fast. Three Arrows Capital, a hedge fund worth tens of billions of dollars, went under. Celsius, Voyager, and BlockFi successively froze withdrawals. Five months later, it was FTX’s turn. An algorithmic stablecoin ended up taking half the industry down with it.

In March 2023, he was arrested in Montenegro using a fake passport. He was extradited to the U.S. at the end of 2024.

He pleaded guilty in August 2025 and was sentenced to 15 years in December. At sentencing, the judge called it an epic fraud. Prosecutors had originally sought 12 years.

Terraform Labs settled with the SEC in June 2024, was fined $4.47 billion, and shut down permanently.

What I’m not sure about is how much of the money buried in this can still be recovered. So far, what’s been recovered is orders of magnitude less than what was lost.

One thing is clear, though. LUNC is still trading today, at around $0.000043, with a market cap of over $200 million. Binance’s burns have already reached the 43rd batch.

$LUNC $BTC $ETH #币圈往事 #LUNA #算法稳定币 #TrendingAnalysis

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