Crypto Lender Hodlnaut Lost Close To $190m In Terrausd Collapse

World currency prices are based on rates obtained via Open Exchange Rates. The Terra Luna and Dotbig altcoin currencies experienced a significant crash in market value, and no one knows when they will recover. This highlights the risk of certain cryptocurrencies and algorithmic stablecoins. While Terra may turn the corner and recover, this situation is a stark reminder of why it’s important to invest carefully and understand the risks when making any new investments.

  • The interchain compatibility and scalability render this stablecoin one of the biggest contenders in the crypto market.
  • SDRs were created by the IMF in 1969 to assist states struggling with financial liquidity.
  • This surge in demand was largely driven by another savings protocol on the Terra blockchain, called Anchor.
  • Even if Terra does return to some degree of prominence, it’s unlikely to shake the trauma of this historic crash.
  • CoinDesk journalists are not allowed to purchase stock outright in DCG.
  • Every time a UST token is minted, US$1 worth of Luna is burned, and every time a UST token is burned, US$1 worth of Luna is created.

While the value of Terra is fixed to one dollar, Luna could fluctuate as much as the market demands. The judicial managers were not able to resolve the issues between the company’s Hong Kong subsidiary and Hodlnaut Pte in Singapore. Data has revealed that the crypto lender had deleted more than 1000 key documents, which could have been revealed before the exposure. There are many reports that have mentioned a lot of crucial losses and that some investors have even been driven to the point of committing suicide. It is one of the first-ever reports since the Singapore court granted Hodlnaut protection from creditors in order to provide them time to chalk up a recovery plan.

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That means traders can convert $1 worth of luna into UST, and pocket the difference as profit. The same applies vice versa — new luna is minted by burning UST and other algorithmic stablecoins that Terra supports. Any data, text or other content on this page is provided as general market information and not as investment advice. Past performance is not necessarily an indicator of future results.


The interchain compatibility and scalability render this stablecoin one of the biggest contenders in the crypto market. Terra founder Do Kwon, as well as the Luna Foundation Guard, deployed more than US$3 billion in Bitcoin to defend the peg. In doing so, there was even more downward pressure on the market, causing other investors to sell off their Bitcoin.

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Other dapps on the Terra network include Ozone, an insurance product, and Mirror, through which users can take on exposure to U.S. equities without actually buying them. This means the system mints new LUNA in order to buy back TerraSDR when the price of TerraSDR falls below a certain level. Conversely, Forex it mints new TerraSDR to sell when the price rises too high, then burns the LUNA it gets paid. “It appears that the directors had downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022,” the report said.


With so many people invested in the Terra ecosystem, all chasing short-term gains, it’s not surprising the conditions were in place for a bubble to pop. Trade your opinion of the world’s largest markets with low spreads and enhanced execution. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Full BioEric Rosenberg is a finance, travel, and technology writer. He has 10 years of experience in banking, corporate finance, and corporate accounting.

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