Cryptographic lover S. Koreans is worried about regulators betting on Luna rising from the ashes

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Seoul — Thinking that there is little to lose at a ridiculously low price, recent South Korean speculators have said that Luna, a cryptocurrency that lost 99.99% of its value last week after the collapse of the pair stablecoin TerraUSD. It was piled up in.

Both tokens are affiliated with Terra, a blockchain platform co-founded by South Korean developer Do Kwon, and according to blockchain analytics firm Elliptic, their investors have lost about $ 42 billion.

Luna is one of the most popular cryptocurrencies in the world, and its collapse, along with TerraUSD, is that Bitcoin lost about a quarter of its value between May 9th and 12th, all over the world. Caused a turmoil throughout the crypto spectrum of.

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Luna, worth nearly $ 100 in late April, is currently trading at a fraction of a penny. It’s so low that it’s flooded with purchases from speculators betting on a miraculous recovery, and some stick to the belief that it too. It is great to be allowed to fail.

“Luna was once a major coin in the top 10 market caps, so we’ll do whatever it takes to revive it,” said a promising investor on the South Korean internet platform neighbor’s blog. I wrote it without saying whether it was.

Bloggers said they used international crypto exchange to buy 300,000 Luna each weekend for 0.33 won ($ 0.0003).

The South Korean financial services commission warned people to invest in Luna on Tuesday as a sudden resurgence of purchases crossed the radar.

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According to FSC sources, the number of failed crypto investors has increased by more than 50% in two days on major South Korean exchanges, reaching 280,000 as of May 15. Give it a name.

The purchases were mainly from domestic speculators, but there was also an influx from abroad.

Two of South Korea’s largest exchanges, Bithumb and Upbit, have announced that they will stop trading support for Luna on May 27 and May 20, respectively, and another Coinone has stopped depositing in cryptocurrencies. , There is limited room for speculation. It may be delisted on May 25th.

The purchase has little effect on the price of the token. Last week I spent a flop between 1/100 and 1/400 cents.

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However, the tendency of Koreans, especially young people, to invest in volatile and high-risk assets, from stocks to cryptocurrencies, is worrisome to regulators.

Their early enthusiasm helped put Luna and TerraUSD among the 10 largest cryptocurrencies in the world ranked by market capitalization.

But on May 10, things collapsed when TerraUSD’s one-on-one dollar pegs were shattered. On Wednesday it traded for about 10 cents.

Unlike most other major stablecoins backed by other assets, the value of TerraUSD is derived by a complex algorithmic process linked to the freely fluctuating pair of tokens Luna.

With this system, one TerraUSD token can be exchanged for $ 1 Luna and vice versa. When exchanged, the coins will be discarded.

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If TerraUSD falls below $ 1, traders are urged to buy stablecoin and exchange it for $ 1 worth of Luna, reducing the supply of TerraUSD and returning the price to $ 1.

It was a theory, but the market proved that the assumptions were wrong.

As the market collapsed, hundreds of resentful private investors flooded social media with tragic stories, some asking Kwon to compensate for the loss.

Kwon announced last week plans to change the system so that TerraUSD will be backed by reserves in the future, but it’s unclear if this plan is achievable.

Cryptocurrency transactions are out of regulation, so there is little that the government can do to protect investors. ($ 1 = 1,273.9300 won) (Report by Ji Hoon Lee and Cynthia Kim, edited by Arun John and Simon Cameron Moore)