Evaluating only Terraform Labs (Terra/Luna)’s profile at its peak — without knowing the outcome — the model ranked Regulation as the #1 likely cause. Documented cause: Fraud.
Key Events Timeline
FOUNDING
Terraform Labs founded in Singapore by Do Kwon and Daniel Shin to build the Terra blockchain.
FUNDING
Luna Foundation Guard raised $1B to build BTC reserves backing UST; LUNA peaked at $119.
FRAUD EXPOSURE
UST depegged after coordinated attack draining $3B Anchor reserves; LUNA hyperinflated to trillions of tokens.
SHUTDOWN
Do Kwon arrested in Montenegro; indicted in South Korea and USA for securities fraud and market manipulation.
Full Analysis
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Documented cause
Terra's algorithmic stablecoin UST depegged on May 7, 2022 after a large coordinated sell-off drained its $3B Anchor Protocol reserves. Co-founder Do Kwon had promised UST's $20 yield was sustainable. Within 72 hours, UST fell to $0.13 and LUNA lost 99.9% of value from $119, wiping $60B in market cap. Do Kwon was later arrested in Montenegro in March 2023 and indicted by South Korean prosecutors for fraud.
Lesson
“Algorithmic stablecoins without real collateral backing are ticking time bombs.”