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.
Terra $LUNA token drops in price by 98% amidst ongoing TerraUSD stablecoin collapse
Terraform Labs develops two cryptocurrencies: TerraUSD ($UST), an algorithmic stablecoin meant to be pegged to the U.S. dollar, and $LUNA, a crypto asset used both for speculation and to help maintain the UST peg. As UST dramatically lost its peg throughout early May, Luna plummeted in value alongside it. Luna was trading between $80 and $90 in the first days of May, but as of May 11 had lost 98% of its value and was hovering between $2 and $3. By midday on May 12, the token was trading at or below $0.01.
- Luna/USD on CoinMarketCap
- National Helpline numbers
"Cryptoqueen" Ruja Ignatova added to Europol's most wanted list in connection to OneCoin ponzi scheme
Ruja Ignatova, also known as the "Cryptoqueen", is a serial fraudster who has been on the run since 2017. In 2019, she was charged in absentia by U.S. authorities due to her connection with the 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.
Coinbase adds new language regarding bankruptcy to its latest quarterly report
Coinbase added new language to its latest 10-Q, a quarterly report submitted by public companies to the SEC. In the section outlining risks to the business, Coinbase wrote: "Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors."
This serves as a stark reminder to users who keep their cryptocurrency on exchanges, that although it is often a more user-friendly way to keep crypto (compared to self-custodying), it exposes users to risk like this.
Some members of the crypto community expressed shock, with Swan Bitcoin CEO Cory Klippsten tweeting, "Is this real?!?"
Former footballer Michael Owen claims his NFTs "will be the first ever that can't lose their initial value"
In what almost guarantees some fun lawsuits down the line, former footballer Michael Owen tried to hit back at "the critics" by announcing that "[his] NFTs will be the first ever that can't lose their initial value". Owen's business partner quickly turned up to do damage control, writing "we cannot guarantee or say that you cannot lose. There is always a chance".
It appeared that Owen might have meant that there would be a lower bound on resale price of the NFTs, which is neither a new concept in NFTs (see Kaiju Kongz or Rich Bulls Club), nor does it mean the NFTs "can't lose their initial value". It just means that when the NFTs do lose their initial value, collectors can't recoup even a portion of their investment.
- "Michael Owen mocked after making bold claim that his NFTs can't lose value", Manchester Evening News
G.O.A.T. token developer rug pulls for $260,000
The G.O.A.T. ("Greatest of all Tokens") project claimed to be "the new standard in cryptocurrency", with vague claims that it would "add value by addressing scalability and risk management utilizing a broad range of strategies". Unfortunately for buyers, one risk they didn't manage was that one of the project developers would suddenly sell off their holdings, making off with $260,000 while crashing the token price to nearly $0.
The remaining project developers have tried to remain positive and restore faith in the community, accusing the developer who sold of "gluttony" and "greed". The project also implemented a steep 50% tax on remaining holders to discourage them from trying to sell.
Founder of popular Azuki project admits to past rug pulls
In a blog post titled "A Builder's Journey", the founder of the popular Azuki NFT project admitted that he had also been behind the NFT projects CryptoPhunks (note the "h"), Tendies, and CryptoZunks. CryptoPhunks were simply mirrored versions of the early CryptoPunks project. In his telling, he decided to "decentralize the [CryptoPhunks] project by handing over the reins to our community". Many, if not most, others consider CryptoPhunks to be a rug pull — abandoned by its founder in a betrayal of the community. The same is true for the other two projects that Zagabond admitted he ran.
This news came as a shock to many lovers of Azuki NFTs, pricey NFTs which regularly trade for 20–30 ETH (~$45,000–$70,000). Azuki is not without its own controversies, recently facing accusations of insider trading.
- "A Builder’s Journey", by Zagabond
- Tweet by zachxbt
TerraUSD (UST) stablecoin dramatically loses its peg
It's been a rough few days for TerraUSD, one of several popular stablecoins pegged to the US dollar. Unlike many stablecoins like Tether or USDC, Terra is an algorithmic stablecoin, meaning that instead of (ostensibly) being backed 1-1 by various assets, they are based around an algorithm that uses various market incentives to maintain a set price. UST is the largest algorithmic stablecoin on the market at the moment, followed by projects like Fei and FRAX.
The incentives that should keep TerraUSD trading at $1 have been put to the test lately, with a combination of spiraling cryptocurrency prices across the board and some apparent large sell-offs by those holding UST. The coin dipped down to $0.992 on May 7 before some large buys returned it close to its peg. It dipped again by a smaller amount the following day, reaching a low of around $0.994. These values may seem like small changes on the micro scale, but when major stablecoins diverge from their peg by even fractions of a cent they have major effects throughout the cryptocurrency ecosystem.
On May 9, UST saw its most extreme de-peg, plunging to $0.95, then again to $0.84 later that day, despite Luna Foundation Guard liquidating $1.3 billion in Bitcoin reserves to try to restore the peg.
Do Kwon, cofounder of Terraform Labs, initially seemed to be doing his best to portray confidence on Twitter by tweeting things that give the exact opposite impression. "If yall girls are gonna fud, try to do it during my waking hours pls," he wrote on May 7. "You could listen to [crypto Twitter] influensooors about UST depegging for the 69th time. Or you could remember they're all now poor, and go for a run instead", he tweeted, somewhat blithely acknowledging UST's repeated history of losing its peg. His tweets seemed to take a more serious turn beginning the evening of May 8, as the situation grew more dire.
Attacker steals $3 million from Fortress Protocol
An attacker was able to steal 1,048 ETH (~$2.65 million) and 400,000 DAI from the Fortress Protocol borrowing and lending platform in what appears to have been an oracle manipulation attack. The attacker quickly moved their ~$3 million in stolen funds to the Tornado Cash cryptocurrency tumbler to obscure their tracks.
The exploit caused the $FTS token to drop 42%. The creators of Fortress urged people not to supply any assets to the pool as the attack was ongoing, and tweeted "we need the support of all of our partners and key organizations in the community to assist and try to freeze and bring back the funds!"
Cashera makes off with $90,000
Cashera was a project claiming to provide a "banking revolution" with its CSR crypto token. The project did many things to try to appear legitimate, including linking to government records showing a company with their name is registered in the UK and undergoing a smart contract audit by AuditRateTech. Their website boasted "partners" including VISA, PayPal, Netflix, and Spotify.
Despite all this, the project deployer suddenly minted 23 million CSR tokens, which they swapped for almost $90,000 in other assets, crashing the token value in the process by about 70%. The development team also took the project website offline.
Hunter defi project rug pulls for $1.2 million
Under the pretense of a contract upgrade, the Hunter defi project team drained the liquidity from the project, swapping the tokens for assets worth around $1.2 million. The team also took down the project website and closed the Discord server.
The rug pull was first noticed by CertiK, a blockchain security firm that had also audited the project. "We pointed out these major centralization issues in their audit," CertiK wrote on Twitter.