A recently published study sheds new light on the total collapse of the Terra (LUNA) network. It is argued that there may have been a inside job† One or more Terraform Labs employees may be responsible for the initial decoupling of UST and the US dollar.
Terra attack came from within
It new researchwhich was done by the blockchain security company Uppsala security and CoinDesk Korea, don’t beat around the bush. It is stated in quite direct language that there were people within Terraform Labs who may have been responsible for the demise of the Terra network.
Using on-chain forensic tools, Uppsala Security and CoinDesk Korea spent about a month investigating the causes of the Terra project crash. The crypto wallet (0x8d47f08ebc5554504742f547eb721a43d4947d0a), referred to as “Wallet A”, has previously been flagged as an attacking party by a range of other research firms
It was often thought that this wallet belonged to, for example, a major player on Wall Streetbut the new investigation from Uppsala Security and CoinDesk Korea shows that this wallet was owned by Terraform Labs or the Luna Foundation Guard, the organizations behind the Terra network.
What did the attack on LUNA look like?
On May 7, according to the investigation, there was a first failed attempt to decouple UST from the US dollar. Do Kwon, CEO of Terraform Labs, then announced that she took at least $150 million in liquidity from the Curve DeFi protocol to ensure the stability of UST.
Then “Wallet A” sprang into action. They exchanged $85 million UST for Curve, which is another stablecoin. Wallet A executed a massive UST trade just 13 minutes after Do Kwon announced that UST liquidity was being removed from the Curve protocol.
Subsequently, Wallet A made a number of transactions involving huge amounts of UST and USDC that eventually resulted in the UST stablecoin being the peg lost with the US dollar. This subsequently resulted in a bank run with disastrous consequences. And according to this new research, this was able to take place through the actions of people within Terraform Labs.