- TerraUSD de-pegged from the dollar in May 2022
- Terra’s native token LUNA crashed following the de-peg
- No one has been arrested or accused in connection to the historic collapse
Seven months following the spectacular implosion of the Terra ecosystem, authorities have not yet revealed the reason why the algorithmic stablecoin TerraUSD (UST) de-pegged from the dollar. But a cryptocurrency researcher has uncovered blockchain data, supposedly showing the reason behind UST deviating from its intended peg.
The latest information about the infamous algorithmic Terra stablecoin UST came from a crypto researcher who goes by the Twitter handle @FatManTerra, who slammed in a Twitter thread Terraform Labs’ narrative that its stablecoin was attacked.
According to FatMan, TFL itself was behind the weakening of the decentralized stablecoin’s curve pool when it sold more than $450 million in UST in the weeks leading to the controversial implosion.
“New blockchain data reveals the root cause of the May UST depeg. In the 3 weeks leading up to the depeg, one entity dumped over $450m of UST on the open market. 4 days after their last sale, UST started collapsing. That entity? None other than Terraform Labs,” the researcher revealed.
The explosive data, which showed the massive dumping activity of TerraUSD, was uncovered and collated by the anonymous researcher who only goes by the Twitter handle @Cycle_22.
Blockchain data revealed that TFL, the team that developed the Terra blockchain, dumped more than $1 billion UST by selling the stablecoin on Curve or moving them to Binance, the world’s largest cryptocurrency exchange in terms of trading volume.
Cycle_22 allegedly unearthed these details because all the transfers stemmed from the TFL Curve Bot 2 address. The same address was mentioned in the independent audit Terraform Labs released last month.
“TFL has been perpetuating the narrative that UST was ‘attacked.’ This is a false flag. In reality, TFL themselves weakened the Curve pool by irresponsibly dumping a massive amount of UST in a short timeframe. This reduced liquidity and severely weakened the peg,” FatMan claimed.
Moreover, FatMan explained that the massive dump and the $2.7 billion that Terraform Labs removed via Degenbox helped to the epic collapse of the algorithmic stablecoin.
This means that TFL, which is headed by its CEO Do Kwon, removed all the real dollars from the ecosystem, creating a situation where investors could no longer redeem their UST.
“But one man – Do Kwon – had amassed billions of UST tokens without putting any real dollars in at all. He printed them out of thin air using his LUNA tokens. This UST can now be used to pull real dollars out of the box. It’s essentially carte blanche access to a money printer,” FatMan said.
“TFL & Do Kwon then start pulling money out of the ecosystem as fast as possible,” the crypto researcher added, noting that what makes it worse was that “it was removed weeks before the depeg.”
Kwon is currently on the red notice list of Interpol, according to South Korean authorities. But until now, his whereabouts are unknown. So far, no one has been arrested or accused in connection to the historic collapse, which wiped out around $60 billion in investment.
While the South Korean authorities recently requested an arrest warrant for TFL co-founder Daniel Shin and seven other individuals connected to the company, the court denied the request.
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