First Apology Issued Regarding the Crash Incident
[Asia Economy Reporter Hwang Sumi] Kwon Do-hyung, CEO of blockchain company Terraform Labs, has acknowledged the failure of the cryptocurrency project and issued an apology.
On the 14th, Kwon shared his stance on the crash of the Korean cryptocurrency Luna and TerraUSD (UST) through his social media (SNS).
He said, "Over the past few days, I have been on the phone with Terra community members, employees, friends, and family who were deeply shocked by the UST de-pegging (value falling below 1 dollar)," adding, "It pains me to have caused suffering to all of you with my invention."
He also claimed, "Neither I nor any related institutions have profited from this incident," asserting that he did not sell Luna or UST during the crash crisis.
He continued, "What we must protect now are the community and developers who make the Terra blockchain space valuable," and added, "I am confident that our community will build consensus on the best path forward and find ways to rise again."
On the 14th, Kwon Do-hyung, CEO of blockchain company Terraform Labs, acknowledged the failure of the cryptocurrency project and apologized through his social networking service (SNS). [Photo by Twitter]
Earlier, Luna and the stablecoin UST recently caused a major shock to the global cryptocurrency market and investors due to their crash. Stablecoins are cryptocurrencies that secure stability by pegging their value to other assets such as the dollar, and Luna is a mining coin created to stabilize the price of UST.
Terraform Labs has issued coins by adopting an algorithm that adjusts the supply of the base currency Luna to maintain the value of one UST at one dollar. Additionally, they attracted investors by promising up to a 20% interest rate when UST is deposited and exchanged for Luna.
In the early stages of the business, Terraform Labs faced criticism of being a Ponzi scheme related to the trading algorithm of Luna and UST, as the stablecoin was backed not by real assets but by other cryptocurrencies.
There were no issues during the cryptocurrency market's rise, but as the market recently declined, system problems emerged. When UST fell below one dollar, Terraform Labs issued a large amount of Luna. They attempted to defend the price by buying back UST with Luna to reduce circulation.
However, caught in the trap of increased currency supply, Luna's value plummeted. According to cryptocurrency exchange Coinbase, Luna's current price has crashed by 99% to $0.0001. The price of UST has dropped more than 80% to 12 cents.
To resolve this, CEO Kwon sought to raise $1.5 billion in funding, but it reportedly did not succeed. Bloomberg reported that Terraform Labs contacted several companies in the crypto industry but apparently failed to secure funding.
Foreign media also criticized Kwon by comparing him to Elizabeth Holmes, the former Theranos CEO who fell from a Silicon Valley star to a fraudster.
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