Fresh findings on Terra's collapse reveal that the stablecoin's crash may have been an inside job.
According to a recently published report by Uppsala Security and Coindesk Korea, the wallet responsible for Terra’s attack is under the management of Terraform Labs, contrary to previous conclusions.
Terra Crisis and Possible Conspiracy
On May 7th, stablecoin UST, native to the Terra network, depegged, falling below the fixed 1 dollar mark. Sister coin, LUNA, followed very closely, crashing with great speed. In the space of a few days, both coins had lost over 99% of their value, effectively tanking billions of dollars of investor funds.
A month after the Terra debacle, investors are still reeling from the major losses they sustained. While Terraform Labs, has attempted to revive the LUNA token, its efforts have not spared the company or its founder from investigations from lawsuits. Uppsala’s published report is the latest in the barrage of probes Terraform Labs now face.
At first, several theories speculating the cause of the Terra incident swarmed the internet. Most of these speculations concluded that the crash was the doing of malicious Wall Street whales. However, new findings have debunked these theories. Coindesk Korea’s new reports suggest that the crash was, in fact, a result of actions taken by Terraform Labs itself.
According to the published research, Do Kwon’s Terraform Labs and its affiliates, managed the wallet responsible for the de-pegging and subsequent collapse of the UST stablecoin.
Uppsala Security discovered that the wallet, dubbed Wallet A for easy identification, had conducted a series of suspicious transactions. The attack on Terra began when a wallet pulled out 150 million USD worth of UST from the curve pool. According to the founder of Terraform Labs, Do Kwon, the firm did this to retain the digital asset’s liquidity.
However, soon after this occurred, Wallet A then traded 85 million UST for USDC. It then transferred the USDC to a Coinbase wallet. As a result of these transactions, a significant amount of UST flooded the market at once, effectively devaluing the stablecoin.
Similarly, Terraform Labs is under investigation by the SEC for possible violation of investor-protection regulations.