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| Terraform Labs CEO Do Kwon / Yonhap |
By Lee Min-hyung
The collapse of Terra and Luna cryptocurrencies is causing chaos around the world, triggering a domino effect of sequential defaults from companies that invested in the ill-fated stablecoin and its sister token.
Three Arrows Capital, a Singapore-based crypto investment company, defaulted on Monday after failing to repay more than $670 million in crypto loans. Earlier, the crypto-focused hedge fund lost $200 million it had invested in Luna.
The company's financial status got worse after the recent crypto downfall. Prices for not just alternative coins, but major ones such as Bitcoin and Ethereum, the world's two most valuable cryptocurrencies in market capitalization, also declined sharply in the wake of the Luna shock in May.
This escalates fears that more crypto companies and Luna investors may follow a similar path as the hedge fund in case the ongoing crypto winter lasts longer than expected.
Earlier this week, hacktivist group Anonymous sent a warning message to Do Kwon, founder of the two coins and CEO of Terraform Labs.
"Do Kwon, if you are listening, sadly, there is nothing that can be done to reverse the damage that you have done," the group said in a YouTube video clip. "At this point, the only thing that we can do is hold you accountable and make sure that you are brought to justice as soon as possible."
Kwon is known to be in Singapore, but his specific whereabouts remain unclear. He has not made any public appearances after the Luna token started its rapid collapse in mid-May.
Terraform Labs launched the Terra 2.0 project late last month, in a desperate bid to revive the once-prominent Terra ecosystem. The rebranded Luna started trading on May 28, and its value soared to around $20 shortly after its listing on major crypto exchanges. But it failed to regain its luster with its price falling steeply.
According to data from CoinMarketCap, the new Luna token was traded at less than $3 as of Wednesday afternoon. The cryptocurrency has in recent weeks shown little sign of rebound, hovering around the $2 range.
Given that the controversial Terra ecosystem was established by the Korean entrepreneur, a financial watchdog here pledged to push for cooperation with its overseas counterparts to prevent a recurrence of the recent Luna debacle.
The Financial Supervisory Service (FSS) also agreed to hold a risk management meeting each month with officials from the nation's top five crypto exchange operators including Upbit and Bithumb.
"We cannot rule out the possibility that a new type of risk spreads to the existing financial market if a big blur deepens amid a convergence of virtual assets and traditional finance," FSS Deputy Governor Lee Jin-seok said.
Starting from July, the authority will also hold meetings with overseas watchdogs to step up monitoring of potential risks in the market.
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