Mysterious Wallet Cause Terra Crypto Crash
It has been nine months since the crypto project Terra (LUNA) experienced a catastrophic collapse in May of 2022. In the span of just one week, Terra’s algorithmic stablecoin, UST, was unable to keep its exchange rate pegged to the U.S. dollar value. As a result, both UST & LUNA’s price experienced a precipitous decline, with UST losing about 99% of its value. It’s speculated that there were a number of factors contributing to the massive crypto crash, as $60 billion got wiped out of the cryptocurrency space.
In the aftermath of the LUNA crisis, numerous post-mortem examinations have been carried out, and a certain “Wallet A” has emerged as the primary suspect; shown to have played a significant part in the UST de-pegging event.
According to Igor Igamberdiev, Head of Research at Wintermute, the “Wallet A” swapped 85 million UST for USDC, causing an imbalance in the UST/3CRV Curve pool, which eventually led to the Terra (LUNA) ecosystem’s collapse. According to his research, the wallet associated with last year’s UST depeg may have belonged to the trading firm Jane Street Group.
According to Igamberdiev’s analysis of the wallet’s transactions, there is a “good possibility” that the wallet is linked to Jane Street. Clearpool announced on May 3 of the previous year that Jane Street had borrowed $25 million USDC from BlockTower through its permissioned lending pool. Based on this information, Igor was able to identify three addresses that belonged to the trading firm; one of these addresses, dubbed Wallet A, was of major relevance
Two weeks later, the same wallet borrowed another $25 million before transferring the funds to a Coinbase hot wallet. However, Igamberdiev stated that the UST de-pegger had credited the Coinbase wallet with 84.5 million USDC prior to receiving the loan amount. Furthermore, Igor discovered that the wallet had no other interactions besides these deposits, indicating that the wallet could have belonged to the same entity.
Furthermore, Igor noted that the wallet — allegedly owned by Jane Street — held UST on LUNA’s yield-bearing Dapp “Anchor” for a month, which did not necessarily imply that the entity had malicious intentions.
(With inputs from Shikha Singh)
You need to login in order to Like
