As supporters of the failed Terra blockchain launched a new digital token to compensate investors who were burned by one of crypto’s biggest busts, the blow is coming.
Luna 2.0, as the coin is known, emerged from the ashes of crypto entrepreneur Do Kwon’s ecosystem, which collapsed after the TeraUSD algorithmic stablecoin at its center fell from its dollar peg in early May. But any hope of a quick recovery seems to have faded for investors who lost billions of dollars in the crash, with only the token losing more than half of its value in the past week, based on data from CoinGecko.
The trouble is compounded by securities regulators in the US and police investigations in South Korea. Bloomberg News reported Thursday that the US Securities and Exchange Commission is investigating whether the marketing of TeraUSD violated federal investor-protection regulations. In Seoul, police are investigating allegations that employees of Luna backer TerraForm Labs embezzled bitcoin holdings to help protect the pegged TeraUSD in dollars.
Four market watchers asked about their thoughts on Luna 2.0, expressing doubts about the coin’s prospects, and about the new blockchain it runs on. Here’s what they had to say:
Mati Greenspan, Founder of Quantum Economics:
“Luna 2 was never meant to survive, it was just a mechanism for some people who had invested heavily to make up for some of their losses at the cost of new money coming from the hype. I have no idea the price will ever go up.” Don’t see a reason.”
Kunal Goyal, Research Analyst at Messari:
“Tera 2.0 suffers from a number of problems. It has gone live in hostile macro and crypto environments. Without an algorithmic stablecoin, it has no clear point of difference from other smart contract platforms. Ultimately, regulatory overreach on investors’ minds. A major concern.”
Riyadh Carey, research analyst at Kaiko:
“Luna 2 will be difficult to differentiate itself in a crowded L1 ecosystem with big players like Avalanche and Solana and of course Ethereum. While the original Terra had a fairly robust ecosystem, the majority of that activity is UST and AUST (US). UST earnings yield in Anchor). Additionally, some price action was based on the burning of LUNA to create UST. So now Luna 2 does not have this mechanism, facing inflation in the form of vested/unlocked And it’s obviously the stuff to be tied to the biggest crypto collapse ever. So it’s definitely going to be a tough road ahead.”
Khalilullah Baig, Founder and CEO, KoinBasket:
“Everyone wants out of the new Luna because founder Do Kwon has lost credibility among the community. Luna has no future. The founders didn’t build firewalls around algos, even when they had the opportunity to do so So they have lost credibility. Building new Luna within the existing community will no longer make sense. Smart money from such risky coins will move to original coins.”
This story has been published without modification in text from a wire agency feed. Only the title has been changed.