The collapse of Terra, sanctions and the legalization of mining. The main events of the year
In 2022, the whole world was discussing what was happening in the crypto market. The digital currency industry was in the process of transition again, including the painful bankruptcies of major cryptocurrency companies. However, there have been other major events in the last 12 months.
In March of this year, Terraform Labs founder Do Kwon backed a bet by blogger Sensei Algod, who offered to bet on the price of the Luna token a year from now. The blogger claimed he was willing to bet $1 million on a drop in the value of the altcoin. Do Kwon agreed.
At the time, the Luna token was one of the leaders in terms of capitalization, with a price of about $88. And the total blocked value of assets (TVL) in projects based on the blockchain Terra reached $25.6 billion. On this indicator, Terra was second only to the undisputed leader of the altcoin Ethereum.
The collapse of Luna and UST
In April 2022, the token Luna continued to actively grow in price and updated its historical maximum at $119.5. However, everything changed in the next month, on May 8. On that day, the TerraUSD (UST) algorithmic stablecoin temporarily lost its peg to the U.S. dollar after a user sold nearly $300 million worth of UST at one time.
Luna token was used to stabilize the UST price, but even a sharp increase in its issue and large sales, which led to a drop in its exchange rate by 86% overnight, did not help. By May 11, UST was down to $0.4 and Luna was down to $4.5.
In mid-May, Terraform Labs CEO Do Kwon proposed a plan to revive the Terra blockchain with token distribution to LUNA and UST holders. Under the plan, Luna holders would receive new Luna 2.0 tokens within four years at the launch of the new network.
Do Kwon's plan was supported by major crypto exchanges, including Binance, Huobi and others. Shortly after the restart of the ecosystem, the price of the new Terra token fell by more than half, then continued its decline. At launch on May 28, 2022, the new LUNA token was trading at $18.87; by now, it had collapsed 94% to $1.27.
Investigation and wanted
In late spring, the South Korean prosecutor's office began investigating Terra for signs of a pyramid scheme. This came a day after South Korean law firm LKB & Partners announced plans to sue and have the head of the project's assets seized.
On the popular South Korean messenger Kakaotalk, more than 1,100 users affected by the collapse of UST and LUNA gathered in open group chats. They also discussed the possibility of legal action against the CEO of Terraform Labs.
In July, the Seoul South District Prosecutor's Office banned key project developers from leaving the country. One Terra employee accused Do Kwon of manipulating the project for his own benefit.
However, a court warrant for Do Kwon's arrest was not issued until mid-September. Prosecutors charged the head of Terra and five others with violating national capital markets laws. All six of the defendants were in Singapore at the time. The prosecutors demanded that their passports be revoked in an attempt to force Do Kwon to return to the country.
In late September, Interpol issued a "red notice" against Do Kwon, after which law enforcement agencies around the world were instructed to search for the head of the project to take him into custody. Do Kwon originally moved from South Korea to Singapore, where the Terraform Labs base was located, but Do Kwon's location has been unknown since September 17. South Korean authorities reported in December that he was in Serbia, but no action has been taken against him so far.