Between a price that plummeted from the first hours on sale and a founder being sued,The new Terraform Labs project isn’t really off to a great start.
The beginning is complicated for Luna 2.0. Just hours after launch, the new version of the Luna cryptocurrency already experienced a sharp drop in value. The token (a term used to refer to any unit of cryptocurrency, outside of bitcoin and Ethereum) went live at 11 a.m. Saturday, May 28, and traded a few hours later at $3.9, down. of almost 78% . This Tuesday, May 31, four days later, the Luna has still failed to recover and is trading around $8, according to Coinmarketcap.
More than 60 billion losses
That is not the only bad news for the new Luna: the transaction volume also fell by 64%, according to Blockwork, from 393.4 million to 145.3 million.
The new cryptocurrency is trying to rise from the ashes of its predecessor, Luna (now called Luna Classic), and especially UST. This algorithmic stablecoin project was supposed to guarantee its indexation on the dollar thanks to a mechanism of burn & coin with the Luna, the other cryptocurrency based on the Terra blockchain (it was possible to exchange 1 UST for a dollar from Luna). But panic in early May brought the UST to a halt, and efforts to get it back on its feet only made matters worse, causing Luna and the UST to lose all value.
The collapse of the entire Terra ecosystem resulted in the disappearance of more than 60 billion. And despite this, Terraform Labs, the main development team of the Terra project, and Do Kwon, the founder, have announced their intention to relaunch a blockchain: Luna 2.0. A large majority of developers working on the ecosystem voted to launch the new project on May 25, which officially kicked off three days later, on May 28. But for now, the new crypto is plodding along — and Terraform Labs teams can get into legal trouble.
The Terra crash has indeed caught the attention of authorities in Korea. South Korean media JTBC reports that they have launched an investigation against Do Kwon to determine whether he has manipulated Luna and UST prices in the past to take advantage. The Korean authorities are also trying to find out if the country’s exchange platforms had followed the procedures before offering Terra tokens for sale.
To realize this, all Terraforms employees have been summoned by the authorities and will have to submit certain documents to them, Blockwork indicates. According to the outlet, employees opposed the launch of Luna and UST because they saw weaknesses in the crypto protocol. Despite their warnings, Do Kwon would insist on getting the projects off the ground. In addition to the official investigation in Korea, 76 victims have filed lawsuits against Do Kwon and Terra Forms Lab co-founder Shin. Hyun-seong, for fraud.
Despite a falling price and Terraform Labs’ legal troubles, Luna 2.0’s difficult beginnings aren’t said to mark the end of its adventure. The launch of cryptocurrency projects are always fluctuations and prices can vary significantly in the first few weeks. In addition, the impressive end of the previous Luna hit a large part of the crypto market, and it is normal for investors to be cautious and not act on it. The price of the cryptocurrency is likely to stabilize in the coming days – up or down, that remains to be seen.