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Terra’s UST Burn Proposal Gets the Green Light

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All TerraUSD (UST) tokens retained in the project’s community pool, as well as UST utilized for earlier Ethereum liquidity incentives, will be burned, according to the Terra governance system.

This translates to, moreover, 1.3 billion UST, or nearly 11% of the current 11.2 billion supply, according to CoinGecko. The proposition received 99.3% of the total votes cast in favor of it. After the voting period ended, Terraform Labs, Terra’s main development corporation, will carry out the burn.

There will be two steps to this procedure. To begin, around 1 billion UST will be transferred from Terra’s communal pool to a burn module, where it will be permanently removed from the supply. The team will then manually bridge 370 million UST from the Ethereum network to Terra and destroy them, as described in a Terra governance forum explanatory article.

UST burn process will begin soon

The dollar-pegged algorithmic stablecoin plummeted from $1 to $0.04 earlier this month before resuming trading at $0.03. It is now worth 96 percent less than it was before the loss of dollar parity.

Terraform’s resuscitation plan to rebuild the Terra network and issue LUNA 2.0 tokens was approved by Terra’s governance system a day before the burn.

Earlier this month, a request to burn TerraUSD was approved. However, due to technical issues with the concept, it was never realized. According to the new proposal, “the earlier plan attempted to withdraw more from the communal pool than was available, and hence the execution failed.”

The reduction will account for about 8% of total production, perhaps bringing it closer to its original dollar peg.

The relaunched chain will go live today, followed by an airdrop of the new LUNA 2.0 coins to Terra-based asset holders. The new Terra blockchain, on the other hand, will be devoid of UST tokens, and their use will be limited to the original Terra network.

Exchanges Show Support in Assisting LUNA’s Revival by Listing the New LUNA 2.0

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For the launch of LUNA 2.0, Huobi, Binance, FTX, Bitrue, HitBTC, and Bybit cryptocurrency exchanges, have expressed interest in working with the Terra team to launch their new chain without an algorithmic stablecoin.

Binance had previously halted trades after validators paused the blockchain, making trades impossible, but in response to Terra’s statement, announced in a tweet, “The Terra community just approved a vote to ‘Rebirth Terra Network.’

” On the recovery plan, we’re collaborating closely with the Terra team in order to provide the best possible service to impacted Binance users. “Stay tuned for more information.” On May 25, 2022, at 2 p.m. UTC, Bybit will cease LUNA and UST withdrawals, renaming LUNA as LUNC and UST as USTC on May 26, 2022, and Bitrue will commence Luna V2 trading on May 27, 2-22.

The exchanges will assist in the LUNA 2.0 airdrop

Terra’s algorithmic stablecoin UST lost its dollar peg earlier this month in a well-documented disaster. LUNA, its companion coin, crashed at the same time. In the aftermath of the Terra crash, founder Do Kwon proposed creating a new blockchain with the previous token rebranded as Classic and a new token, running on a new blockchain without an algorithmic stablecoin. On the Terra Classic blockchain, the original UST will survive.

A community pool regulated by staked LUNA classic tokens will receive 30% of the new tokens as an airdrop. At the same time, 35% will go to “pre-attack holders,” 10% to “pre-attack UST holders,” 10% to “post-attack holders,” and 10% to “post-attack UST holders,” and 15% to “post-attack UST holders.” Terra Classic block 7544910 will be used for a snapshot, whereas block 7790000 will be used for a post-attack snapshot. The airdrop will be co-hosted by Bybit and Bitrue.

Kwon had even encouraged developers to highlight the new blockchain’s support.

Luna Foundation Guard Funds Were Requested to Be Frozen by the South Korean Police

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Police in South Korea has sent warnings to cryptocurrency exchanges, requesting the freezing of funds linked to the Luna Foundation Guard.

On Monday, Korean authorities sent a request to the country’s largest cryptocurrency exchanges, urging that funds not be transferred. The Luna Foundation Guard was specifically asked by the Seoul Metropolitan Police Agency not to take any action. Authorities claim they have acquired evidence linking the group to embezzlement.

The Luna/Terra algorithmic stablecoin debacle earlier this month devastated investor portfolios overnight, with the coin’s value plummeting by nearly 99 percent. This request, on the other hand, is neither a demand nor legally enforceable. Each individual can choose how they wish to answer, but no one knows how they will react.

Luna Foundation Guard might be in trouble

Several large Korean investors have investigated and sued Do Kwon, the CEO of Terraform Labs, following the collapse of the TerraUSD (UST) stablecoin. As a result of this, the “Grim Reaper,” a Korean Financial and Securities Crime Joint Investigation Team, was revived.

Korean lawmakers have met with executives from Upbit, Bithumb, Coinone, Korbit, and Gopax, among other sites. Because the leaders of these exchanges are not obligated to comply, this meeting is most likely a ploy to put pressure on them.

“We will review the exchange’s investor safety procedures,” Yoon Chang-Hyeon, chairman of the People’s Strength Virtual Assets Special Committee, wrote on Facebook, according to Newspim.

According to the publication, it is reasonable to assume that exchange representatives will be held accountable in some way for the losses suffered by investors as a result of the Terra (LUNA) price drop. The Korean National Assembly, according to Newspim, is making moves to limit punishment in this sector.

Coinone has suspended LUNA trading as of May 11th, and Binance has also suspended certain spot trading.

The request to crypto exchanges and the Do Kwon probe are unrelated, despite the fact that this official report is part of a broader story.

The Intruder Who Visited Do Kwon’s Home Speaks to the Public

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Do Kwon is going through the worst month of his life. The abrupt demise of two popular digital coins in early May stunned investors, wiping $400 billion (£318 billion) off the value of numerous other cryptocurrencies, including the most valuable, Bitcoin. People who have lost their life savings are now begging for aid all across the world. After visiting the residence of Do Kwon at the center of the “crypto crash,” one desperate man was detained. His life was in shambles, he told BBC News.

Fortunes can be won and lost quickly in the fickle world of cryptocurrencies, but one guy in South Korea has been hit particularly hard by the May 2022 crypto crash.

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The Intruder Who Visited Do Kwon’s Home Speaks to the Public 2

Do Kwon’s home visitor speaks up

“I felt like I was going to die.” “I lost a lot of money in a short period of time. Around $2.4m (£1.9m) of my cryptocurrency was wiped out.”

Chancers the cryptocurrency streamer

Chancers has been investing in cryptocurrencies since 2017 and claims to have amassed a fortune in the last five years as the value of Bitcoin and other digital coins has increased.

“Here in Korea I was in the top 1% in terms of my finances. But thanks to the crash, I’m now in trouble.”

Chancers told BBC News

At the worst possible time, Chancers put $800,000 into Terra Luna. Terra Luna gained notoriety in December 2021, when the value of each coin began to rise, from $5 to $116 in April of the current year.

Chancers, like many others, placed a large wager on the coin’s continued rise. However, on May 9, it abruptly plummeted, shedding 99 percent of its value in just 48 hours. Each Terra Luna coin now has a value of less than $0.0002, or two-hundredths of a penny.

Thousands of people flocked to the 30-year-old on social media for answers and a strategy to get the situation under control.

Chancers, in his despair, determined to go one step beyond. He searched online for Do Kwon’s home address in Seoul, enraged by the crypto millionaire’s lack of communication.

“I wanted to ask him about his plans for Luna. I suffered a huge loss and wanted to talk to him directly.”

Chancers

When Do Kwon’s wife opened the door and stated her husband was out, he was dismayed. Worse was to come, as he was arrested after the police were notified.

Do Kwon is putting forth every effort to resurrect Terra LUNA. The founder has proposed that LUNA be Hard Forked without any ties to UST or other algorithmic elements.

Tether CTO Says That “Terra Wasn’t a Rug Pull, Rather It Was Poorly Designed”

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Tether (USDT) and Bitfinex chief technology officer Paolo Ardoino claimed the Terra (LUNA) initiative was “poorly designed” and not intended to be a rug pull.

Ardoino compared its algorithmic stablecoin TerraUSD (UST) to a “castle of cards” that could collapse at any time in response to the Terra ecosystem’s market-shattering disaster.

Many in the crypto world have cited a long record of suspicious statements and acts made by Terraform Labs founder Do Kwon, raising concerns about his behavior. Kwon also worked on the previously failed algo-stablecoin project Basis Cash, according to reports.

Ardoino made the remarks on the Reimagine Unplugged podcast this week, which is produced by Reimagine, a media firm that specializes in Web3 content and events. The chief technology officer indicated that Kwon’s erroneous feeling of self-confidence was a major issue:

“I don’t know Do Kwon. But let’s give him the benefit of the doubt. He created this project with arrogance and with thinking that he was right and many were supporting him, of course, probably for economic reasons, but was not per se, a rug pull, it was a project that was poorly designed as many projects are poorly designed.”

The entire crypto community is talking about Terra’s fall

Ardoino went on to say that UST had grown too big to keep its peg, claiming that its collateralization, which was predominantly in Bitcoin (BTC) at the time as it worked to create reserves, was not large enough to support the stablecoin but was “huge enough to crash the market even further.”

“They were basically in a cascade situation where they had to protect the peg, so they had to sell the collateral. Selling the collateral was generating more crashes, and these extra crashes were driving them to sell more or collateral on,” he explained.

When asked about the future regulatory landscape for stablecoins, Ardoino advised that legislators first identify the difference between stablecoins that are entirely backed by assets and those that are supported mainly by algorithms.

Did Delphi Digital predict UST collapse?

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Delphi Digital, crypto-focused research and investment firm has published a post-mortem on the losses incurred by the collapse of TerraUSD (UST) algorithmic stablecoin last week, concluding that “something like this was always probable.” Delphi wrote late Wednesday on its blog,

“We understood the risks of the algorithmic model upfront and sought to be transparent about them throughout; however, it’s clear we miscalculated the risks. To the vocal critics of Terra’s algorithmic design — you were right and we were wrong.”

Last week, UST de-pegged from the dollar in a disastrous manner, wiping out more than $40 billion in value for investors. Delphi, which competes with The Block for crypto research, was a supporter of the Luna Foundation Guard (LFG), a Singapore-based non-profit with an aim to improve the Terra ecosystem.

LFG’s bitcoin purchases, Delphi digital wrote in an April research bulletin, “gives higher security to protect UST’s peg to the dollar” and “likely reduces the likelihood of it going into a death spiral.” In March, the company announced that customers may pay for their subscriptions with their UST balance and income received from Terra’s Anchor Protocol.

Delphi Digital, one of Terra’s significant operator

Delphi Digital was one of many cryptocurrency exchanges with major exposure to the Terra ecosystem at the time of its demise. For the first time, the group openly assessed the damage in its post.

Delphi Ventures Master Fund purchased an amount of Terra’s native token Luna equal to 0.5 percent of its net asset value in early 2021, according to the company (NAV). Over time, the exposure grew, resulting in “a significant unrealized loss.” Luna and other Terra-native coins accounted for about 13% of Delphi Ventures’ NAV at its peak.

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LFG

Luna received a $10 million investment from LFG in February as part of a $1 billion token sale. Based on the current price of Luna, Delphi said the investment is “completely wasted,” but added that it sold no Luna during the token’s decline. LFG’s governing council includes Delphi Digital partner José Maria Macedo.

Since February 2021, Delphi’s research arm has produced six Terra-focused publications, none of which were paid for, according to the group’s blog post. According to the report, Terra’s demise had little financial impact on Delphi Research.

Terraform Labs Is Reportedly Being Sued for 100 Million Won for Tax Evasion

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Terraform Labs has been fighting for survival as one after the other; the problems seem to pile up. According to reports, Terraform Labs faces a tax evasion fine of 100 billion won ($78.5 million) from the South Korean authorities.

Do Kwon will face charges for reported tax evasion and will have to pay a penalty of 100 billion won ($78.5 million) for failing to pay corporate tax, according to South Korean news agency Naver. Kwon was rumored to be considering liquidating the company and relocating to Singapore due to his dissatisfaction with the country’s tax policies.

Terraform Labs were reportedly trying to evade tax payments

According to the news agency, Terraform Labs was attempting to liquidate the company and relocate its headquarters to another country. Many people were suspicious of the decision, believing it was a ruse to avoid paying taxes. According to the news agency’s sources, Do Kwon was notified by the National Tax Service that he owed 100 billion won ($78.5 million) in taxes.

Ancore and Terraform Labs had been probed by the National Tax Service. Corporate and income tax evasion lawsuits were filed against the corporations.

Do Kwon also owned a 92 percent share in Terra Singapore, according to a separate inquiry. However, the company’s chairman, Shin, ignored any ties to Terraform Labs. Later, it was discovered that he possessed an 8% investment in Terraform Labs.

Last October, the National Tax Service announced an investigation into Terra Virgin, which resulted in a 4.66 billion won income tax penalty. Terra Virgin is a wholly-owned subsidiary of Terra Singapore.

The tax service also discovered that Terra Virgin and Do Kwon sent free LUNA to LFG, a Singapore-based company. Terraform Labs was nabbed in the midst of transferring LUNA to avoid paying taxes, according to the news source.

Because the corporations were regarded as domestic firms, the entire decision to levy the tax was made. Despite the fact that the companies were founded and run in Singapore, the actual administration of the companies is based in Korea.

“Burn LUNA” Gains Momentum As Do Kwon Proposes A New Terra 2.0 Chain

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“Burn LUNA” hashtags continue to gather steam on Twitter even as Terraform Labs creator Do Kwon made his intention clear to go ahead with the on-chain governance proposal despite the majority voting ‘No’ in the online poll.

On 16th May, Kwon proposed the hard fork that would split into two chains: Terra and Terra Classic. The new, non-classic chain would abandon the failing UST stablecoin and instead focus on decentralized finance (DeFi) applications building on Terra, as TronWeekly reported. 

Kwon posted a call to action as part of yesterday’s announcement: “We encourage Terra developers to signal support [and] commit to building on the fork on public channels,” he wrote.

Over a dozen validators voted in support of the fork of Terra that focuses on development rather than its stablecoin. However, results from the preliminary poll indicated that many community members were against the idea.

More than 90% of 6,921 voters on a previously held online poll have voted down the change, with the most popular responses calling for “no fork.”

Fork Or Burn. What Do Experts Say?

The most trending crypto hashtags called for burning LUNA as many in the community felt the token can be salvaged by buying up the circulating supply and then burning it down.

Leading fund managers were skeptical saying that Terra’s senior team would push for forking the blockchain irrespective of the community’s sentiment toward the project. Doo Wan Nam, founder of crypto fund Stable Node said,

“It’s a dilemma for Kwon and Terra’s team as they can technically override the community’s consensus by either forking regardless of the decision or using their staked Luna [to prevent the network from being manipulated] to change the voting to support.”

“This will be received very poorly by not only the Terra community but the wider crypto community. However, Do and his team might not have much choice but to do it to better reflect his vision of the Terra ecosystem,” Doo added.

On the other hand, Terra’s woes refuse to end as reports emerged of possible legal action by a South Korean law firm. LKB & Partners will reportedly file the case against Kwon, a Korean national, on behalf of ordinary investors to the Seoul Metropolitan Police Agency, according to a local news outlet.

Terra Founder’s Call Of Action: Proposes A New Community-Owned Chain For LUNA

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Determined to pull the Terra ecosystem out of its current plight, founder Do Kwon laid out a new “Revival Plan” asking developers to support & commit to building on the fork without the algorithmic stablecoin. including LUNA token.

Calling UST peg failure as a “chance to rise up anew from the ashes”, Kwon put a brave front saying that the ecosystem and its community deserve another chance.

“It would be devastating for broader crypto adoption and advancement if we remain in entropy amidst opposing views, and as such, I propose the following to chart the path forward for our ecosystem,” he tweeted.

In the follow-up thread, the creator proposed forking Terra into a new chain named “Terra” [token Luna – LUNA], and the old chain would be called “Terra Classic” [token Luna Classic – [LUNC]. “Both chains will coexist”, he added.

“New LUNA will be airdropped to LUNC stakers, holders, residual UST holders, and essential app developers.”

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Terra Founder's Call Of Action: Proposes A New Community-Owned Chain For LUNA 5

Kwon also revealed that the foundation behind the ecosystem-TFL’s wallet will be removed from the airdrop, making the project a fully community-owned chain.

Besides that, TFL will be initiating a governance proposal, with Kwon promising that the voting would start on May 18. According to the timeline published in the revival plan, the new network launch could come as soon as May 27.

Terra’s Fork Generated Mixed reactions

Crypto Community’s Sentiment appeared to be mixed toward the proposal.

While some cheered, others felt instead of airdropping new LUNA tokens to UST holders, it would be good to deploy TFL funds to provide relief to small UST holders.

One of them even asked to ditch the hard fork and opt for the buyback and burn course. Interestingly a few days back, Binance CEO CZ was the one to suggest the burn option to reduce supply and “not fork at an old date”.

Shortly after the announcement, Terra’s LUNA has lost nearly a quarter of its value in the past 24 hours.

The token has shed more than 99% since April’s peak of nearly $120. The massive drop was due to excess LUNA circulation last week to prevent the collapse of terraUSD (UST).

Vitalik Buterin Believes That Terra Should Focus On Protecting the Small Investors

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Vitalik Buterin, the co-founder of Ethereum, believes that any suggested payment strategy for the ailing Terra project should favor tiny hodlers.

As previously reported, the Terra ecosystem went into a death spiral on May 9, resulting in Terra (LUNA) losing its US dollar peg and the TerraUSD (UST) stablecoin losing its US dollar peg, which was valued at $0.16 at the time of writing.

With LUNA and UST investors suffering significant losses, the community is now seeking methods to repair the ecosystem and provide financial assistance to many who have been harmed.

Terra’s proposal to refund all UST holders

If the UST dollar is finally stable, one community idea is to repay all original deposits (not yield) of small UST holders initially in order to “greatly enhance overall morale and attitude” while figuring out how to segregate debtors and bigger investors afterward. It is projected that the payoff will cost between $1 billion and $1.5 billion.

On Sunday, Buterin expressed support for the proposal on Twitter, saying that the focus should be on the smaller investor who needs the money, before adding that the whale hodlers should bear the loss:

“Coordinated sympathy and relief for the average UST smallholder who got told something dumb about ‘20% interest rates on the US dollar’ by an influencer, personal responsibility and [sorry for your loss] SFYL for the wealthy.”

While the Ethereum co-founder did not advocate for regulation, he did mention that potential safeguards like bank deposit insurance may be valuable in certain situations.

It’s uncertain at this point if the project will be able to recover or whether it will attempt a brief rebound to recoup investor losses, however tough that may be. It’s also worth noting that the proposal linked to Buterin’s statements has been amended this week, and it now considers paying out all users up to a $50,000 per-wallet maximum.

Another proposal floating around the internet is to create a “TERRA 2” hard fork for the Terra blockchain, as well as a liquidity pool to restore UST back to its peg.

Do Kwon, the creator of Terraform Labs, has suggested a reorganization of the Terra blockchain in order to reset “network ownership” and give 1 billion LUNA tokens to the community.

Popular players in the crypto world, such as Dogecoin (DOGE) co-founder Billy Markus, have criticized Kwon’s planned “Terra Ecosystem Revival Plan” and have asked for him to quit the industry.