Skip to content
Crypto News Focus logo CNF_CRYPTO_NEWS_FOCUS_LOGO 8

Crypto News Focus

your day to day crypto news site

Primary Menu
  • Home
  • News
    • Bitcoin News
    • Ripple XRP news
    • Ethereum News
    • Cardano News
    • Shiba Inu News
    • Pi Network News
    • More
  • Analysis
  • PR Desk
  • About Us
  • General Policy & Privacy
  • Guides
    • Bitcoin Guides
    • Pi Network Guide
    • Cardano Guide
  • Politics
  • Tech
  • Home
  • News
  • Lessons from Terra Luna: How a Promised Safe Crypto Turned into a $60B Collapse
  • News

Lessons from Terra Luna: How a Promised Safe Crypto Turned into a $60B Collapse

vivian 11 June 2025
luna burning
  • Terra Luna collapse in May 2022 erased $60 billion in value, triggering a $2 trillion crypto market crash and bankrupting major firms.
  • Promoted as a stable, decentralized system, it ultimately revealed how even trusted innovations can mask catastrophic risks.

In May 2022, Terra Luna collapsed in spectacular fashion, wiping out nearly $60 billion in value and sending shockwaves across the crypto world. What began as an ambitious attempt to revolutionize decentralized finance (DeFi) ended in one of the most catastrophic implosions in digital asset history. With it came a domino effect—once-prominent crypto firms like Voyager, Celsius, BlockFi, and even FTX fell in its wake. The total damage? A staggering $2 trillion loss across the global crypto market.

RELATED:LUNC Price 60% Surge Potential: What’s Fueling Terra Classic’s Bullish Momentum?

The Appeal: Decentralized, Safe, and Lucrative

TerraUSD (UST), the network’s flagship stablecoin, claimed to offer stability without reliance on traditional banking reserves. It was algorithmic—pegged to the U.S. dollar through a relationship with its sister token, Luna. Combined with Anchor Protocol’s promised 19% annual yield, Terra seemed like a rare safe harbor in a volatile market. It drew in retail investors, hedge funds like Three Arrows Capital, and corporate treasurers, all seduced by the same illusion: high yield without high risk.

The Terra Luna Mechanism Behind the Collapse

The algorithm behind UST relied on minting and burning Luna to maintain its dollar peg. But when confidence eroded and UST depegged, the system spiraled. More Luna was minted in a futile attempt to restore parity, flooding the market and destroying its value. Within days, both UST and Luna were virtually worthless.

Terra Luna Fallout, Finger-Pointing, and Legal Blame

Do Kwon, the network’s co-founder, now faces fraud charges and awaits trial in the U.S. after a global manhunt. Yet regulators haven’t stopped there. Former CFO Nevin Shetty was charged for investing company funds in Terra, despite acting in line with widespread belief that it was a stable, low-risk asset. His prosecution has drawn criticism for punishing victims instead of architects.

The Takeaway: Risk Disguised as Security

The Terra Luna saga is more than a crypto collapse—it’s a cautionary tale about misplaced trust and the dangers of financial euphoria. Even seasoned investors were deceived by the network’s marketing, partnerships, and apparent stability. The lesson is clear: in finance, especially crypto, if something sounds too good to be true, it probably is.

RELATED:What is the common thing between Mantra and Terra Classic LUNC?

 

Continue Reading

Previous: What is the common thing between Mantra and Terra Classic LUNC?
Next: Uniswap (UNI) Price Eyes $10.40 After Inverse Head-and-Shoulders Breakout

Related Stories

SOLANA IMAGE OF PRICE ANALYSIS
  • News

Solana Price Prediction 2025-2030: Can Institutional Catalysts Drive SOL to $500?

Simon Njenga 6 July 2025
XRP COIN AND A BEAR ON THE SIDE
  • News

XRP Price Prediction: Could Banking Charter & ETF Approval Ignite a 1,500 % Rally and Even $100?

Simon Njenga 6 July 2025
Iota coin as the main focus at the middle
  • News

IOTA Becomes the Only Crypto Named in Chinese Government’s 2025 Tech Report

Dennis Gatheca 4 July 2025

For general inquiries, please email us at Info@cryptonewsfocus.com

Crypto news focus is your day-to-day crypto news site. Get all the latest News and trends in the crypto, blockchain, and DeFi space. For more info and inquiries, reach out via email at info@cryptonewsfocus.com

You may have missed

SOLANA IMAGE OF PRICE ANALYSIS
  • News

Solana Price Prediction 2025-2030: Can Institutional Catalysts Drive SOL to $500?

Simon Njenga 6 July 2025
XRP COIN AND A BEAR ON THE SIDE
  • News

XRP Price Prediction: Could Banking Charter & ETF Approval Ignite a 1,500 % Rally and Even $100?

Simon Njenga 6 July 2025
Iota coin as the main focus at the middle
  • News

IOTA Becomes the Only Crypto Named in Chinese Government’s 2025 Tech Report

Dennis Gatheca 4 July 2025
ONDO on $100B Market Projection black
  • News

Ondo and Pantera Launch $250M Fund to Accelerate RWA Tokenization

Jane Kariuki 4 July 2025

Social Media

Crypto News Focus © All rights reserved | MoreNews by AF themes.
Go to mobile version
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok