In early May, Terra (LUNA) and its UST stablecoin went to zero. It had huge repercussions, including the demise of the hedge fund Three Arrows Capital (3AC) and financial difficulties for many other crypto companies. Terra founder Do Kwon was mainly anxiously quiet lately, but now he apologizes.
Do Kwon: “I should have been more skeptical”
For the first time since the crash three months ago, he entered into a conversation with the press. In a interview with Coinage he declares that he himself is mainly to blame for the collapse of the project. “In hindsight, we should have been a lot more skeptical,” he said. The ticker of the largest coin was ‘LUNA’, literally ‘moon’. That sets expectations quite high, of course. The well-known investor Mike Novogratz even had the project immortalized on his arm.
In the first part of the same interview, he stated earlier this week that he actually lost a big gamble. Algorithmic stablecoins such as TerraUSD (UST) started to become the standard, but this turned out to be rather a big mistake in the end.
Still an inside job?
That part of the interview also showed that it was indeed a kind of inside job, as was expected. At the time of the crash, Terra’s entire board was en route to Singapore for meetings, at which point the funds that kept the price going would be moved. Only Terraform Labs employees knew when this would take place. At that point, there would be very little liquidity.
The team would have initially underestimated how much and how quickly UST would be sold. As a result, they had to use the bitcoin reserves, which, according to Kwon, were not used to reimburse large UST whales when the peg broke.
Yet he still wants to continue with Terra. A second token has now been launched, with which victims should be compensated with airdrops.