Do Kwon, the co-founder of Terraform Labs, said that he was “devastated” by last month’s collapse of the TerraUSD (UST) stablecoin and its sister token LUNA, expressing his hope that thousands of investors who have been affected by the Terra ecosystem's implosion are "taking care of themselves."
Kwon also claimed that he had personally lost nearly all his net worth in Terra’s crash, while also hitting back at claims that the project was a “fraud.”
“I made confident bets and made confident statements on behalf of UST because I believed in its resilience and its value proposition,” Kwon said in a recent interview with The Wall Street Journal. ”I’ve since lost these bets, but my actions 100% match my words. There is a difference between failing and running a fraud.”
Kwon's crypto holdings were estimated to have made him a billionaire on paper when LUNA was trading around $100 earlier this year. He said that the loss of the bulk of his net work "doesn't bother" him as he leads “a fairly frugal life.”
The Terra ecosystem imploded spectacularly last month after UST—the project’s algorithmic stablecoin, which was supposed to maintain a 1:1 peg to the U.S. dollar—lost its parity to the greenback, bottoming out at just 13 cents.
At the same time, LUNA (since renamed LUNC), once a top ten cryptocurrency which was used to stabilize the price of UST, crashed to a fraction of a cent, wiping out tens of billions in investors' wealth.
Terra and regulators
The collapse of the Terra ecosystem has attracted regulatory scrutiny. In the United States, the Securities and Exchange Commission (SEC) is reportedly looking into a possible violation of federal investor protection rules in relation to UST marketing practices conducted by Terraform Labs, while South Korean authorities have launched a separate investigation to determine whether intentional price manipulation and other issues could have been behind the UST collapse.
A class-action lawsuit was also brought against Kwon and Terraform Labs last week in U.S. District Court in Northern California.
In the wake of the crash, at the end of May the Terra community approved the launch of Terra 2.0, a project that included creating a new LUNA token.
“I have great confidence in our ability to build back even stronger than we once were,” Kwon told The Wall Street Journal, adding that “many builders” are currently “in the process of relaunching their apps on the new chain.”