Luna trading halted after meltdown in crypto market
THE value of one of the world’s biggest cryptocurrencies has been all but wiped out in the space of four days amid a market rout that has shaken confidence in the sector.
The price of Luna has fallen from more than $60 (£49) each on Monday, when it was the fourth most popular coin in the world, to less than $0.0001 yesterday morning.
The total value of all Luna in existence has fallen from more than $20bn (£16.4bn) on Monday to $500m.
Luna exists to prop up the value of Terra, a so-called “stablecoin” designed to be tied to the price of the dollar.
In theory, Terra owners are supposed to be able to trade their coins for one dollar’s worth of Luna, ensuring that Terra’s price is stable.
But a loss of confidence in the system maintaining the price has led to a mass sell-off of Terra, in turn driving down Luna’s price. Terra has fallen from $1 to less than $0.15 yesterday.
Trading in the Terra network, on which Terra and Luna trade, were suspended yesterday. Its operators said it was looking to “reconstitute” the network to bring back stability.
Meanwhile, major cryptocurrency exchanges said they would delist the currencies from their websites, cutting off the project to most consumers.
In South Korea, the wife of Luna’s founder Do Kwan filed a police report after an investor appeared at her door looking for her husband.
Meanwhile, investors in the US sued the cryptocurrency exchange Coinbase over the state of a separate stablecoin, GYEN. Users said Coinbase had misled investors about the token’s stability.
According to the lawsuit, it was supposed to be tied to the Japanese yen but traded hands for as much as seven times when Coinbase added it to its exchange last year, leading to huge losses when it reverted to its original value.
The Terra sell-off, likened to a bank run, has rocked markets this week. On Thursday, Bitcoin fell below $27,000 to its lowest since 2020 and well below its November 2021 high of $67,000.
Some recovered yesterday. Bitcoin rose above $30,000 while Tether recovered to trade around the dollar mark.