On May 13, the company announced it would be reversing transactions made during an hour-long period on May 12 when "users who traded LUNA were quoted an incorrect price". Some users were able to profit off the discrepancy, but later were told that their transactions were being reversed. Crypto.com offered $10 in CRO, their cryptocurrency token, "for the inconvenience caused". Crypto.com halted Luna trading after discovering the issue, and it remains halted as of May 13.
The issue sounds quite similar to issues that affected various defi projects around the same time. Several projects who failed to account for unexpected Luna price data coming from blockchain oracles including Chainlink suffered major attacks.
- "LUNA Trading Incident on Crypto.com App", Crypto.com
Unexpected oracle data in the wake of Terra blockchain halt enables multiple attacks on other platforms
$13.5 million was fraudulently borrowed from the Venus protocol on BSC. Blizz Finance on Avalanche reported their protocol had been entirely drained, amounting to around $8.3 million. Blizz subsequently announced in a post-mortem that "Blizz has no treasury or development fund and a significant portion of the stolen assets belonged to our team. As such we regret to announce the protocol has been paused and we do not intend to resume operations."
The two fraud charges carry maximum sentences of 10 and 20 years.
Terra only announced this after halting the network, giving their users no opportunity to try to withdraw funds. They have made no announcement about whether or when they intend to bring the network back online, although it seems safe to assume that the enormous loss of confidence in Terra would make any restart short-lived.
Tether began to recover somewhat as the day progressed, gradually returning to above $0.99. However, the de-peg has clearly shaken the cryptocurrency ecosystem. The heavy reliance on Tether means that a substantial or protracted loss of its peg would be devastating, and the open secret that Tether does not have the backing assets it once claimed has intensified fears about a possible run on Tether.
- "Important Notice For All Customers", BitPrime
Do Kwon has never disclosed his involvement with this failed project. CoinDesk wrote that although their "default position is to respect the privacy of pseudonymous actors with established reputations under their well-known handles unless there is an overwhelming public interest in revealing their real-world identities", there was now "such public interest as Kwon’s UST stablecoin death spirals, wreaking havoc across the broader cryptocurrency market. Amid this precarious situation, investors deserve to know that UST was not Kwon’s sole attempt at making an algorithmic stablecoin work." It was not made clear in the article when CoinDesk first learned of Kwon's connection to Basis Cash, though the authors later stated they'd learned of it the night before they published.
Such a dramatic crash in a cryptocurrency that was in the top ten by market cap has been devastating to some. Some members of the Terra/Luna community on Reddit have spoken of being massively over-invested in Luna, with some describing losing their life savings and appearing to be in crisis.
"Cryptoqueen" Ruja Ignatova added to Europol's most wanted list in connection to OneCoin ponzi scheme
OneCoin was a Bulgarian ponzi scheme in which investors bought packages of "tokens" with which they would supposedly "mine" cryptocurrency. Despite advertising as a decentralized cryptocurrency, OneCoin in reality was centralized on the company's servers. The scheme attracted around $4 billion in investments since its creation in 2014, and several people associated with the project have pled guilty to money laundering and fraud charges.