The collapse of crypto Luna and its associated terraUSD stablecoin was Unexpected as billions of dollars in crypto wealth have been vaporized by their diving shockwaves throughout the market.
Looking at the graph that represents the cryptocurrency market nowadays, you can check out that it seems unsafe in all possible directions. As Bitcoin and ether are at their lowest point since 2020, altcoins, dogecoin, and Cardano are falling worse. Virtual Currency volatility and rough economic conditions are affecting cryptocurrency and the stock market. This unprecedented dive seems to be painful for investors investing in cryptocurrency.
On this sudden collapse of Terra, Luna the Tommey has recently presented the bill focused on stablecoins and said that investors might be misrepresenting the nature of Terra. There was a promise for Luna for huge returns, offering “very dubious technology”, he added. Toomey told Barron that the Terra might be a fraudulent project due to this collapse.
Bill Ackman is a prominent hedge fund manager who concluded about Terra, saying it was a pyramid scheme. He also warned that such fraudulent projects might also threaten the entire cryptocurrency ecosystem.
Further, FTX CEO Sam Bankman-Fried had also said that Terra was a Ponzi after the blockchain project’s failure, which was further compared to the infamous biotech scam Theranos. Bankman-Fried got into arguing over whether the project was a case of “Mass enthusiasm.”
The CEO of Pershing Square Capital Management claims that investors were promised 20% returns backed by the token value depending on the number of new buyers.
When there is no business fundamentally, it is obvious to have the collapse of the token; as the supply of sellers overwhelmed buyers, the Luna token crashed to Zero virtually. This left a slew of investors in dust.