Terraform Labs’ parent firm, Terraform (LUNA-USD), seems to be disappointed with the new Terra (LUNA-USD) 2.0 network. In reality, the enterprise is proving to be the polar opposite, collapsing spectacularly less than two weeks after its inception. Short bets in the new LUNA cryptocurrency are becoming more popular among investors. Meanwhile, the business in charge of the project is in hot water. There are several allegations of deception, manipulation, and lying.
Terra’s collapse last month came as a shock to many, and it happened so quickly. Terraform Labs’ reaction to the incident is maybe just as startling. Before the end of the month, a community request to construct a second network had been authorized. Terra 2.0 was supposed to be the network’s phoenix moment, with investors and developers uniting to preserve one of the world’s most ambitious enterprises.
Except that’s not how things are turning out. After launching at about $18 on May 27, the currency had just a short uptick before plummeting to $4. The currency has failed to mount a convincing rally in the days afterwards, instead plunging further lower. LUNA is now trading at $2.82 per share.
These losses are continuing to mount. Meanwhile, investors are launching short bets in the currency rather than purchasing the drop. CoinTelegraph reports roughly $4 million in LUNA transactions across Binance and Bybit as the currency makes a little rise today. Nearly $2.5 million of the $4 million is made up of short bets. The majority of investors are expecting greater price reductions and are hoping to profit from the losses. What’s making them so pessimistic?
Investors Short LUNA as Terra Network Flounders In the midst of investigations
The Terra network’s reputation is still shaky today, thanks to a number of probes into Terraform Labs. Investigations are underway in both the United States and South Korea, where the firm was founded. As a consequence, investors are pessimistic about LUNA crypto prices.
The company’s investigation by the Securities and Exchange Commission (SEC) is unrelated to the Terra collapse. Rather, Do Kwon’s failure to challenge a previous probe into Mirror Protocol serves as a negative trigger in the United States (MIR-USD). Regardless of its lack of connection to the larger problem, the announcement is nevertheless a setback for the corporation, which is currently dealing with other inquiries.
Meanwhile, the South Korean government is especially harsh on the corporation. Terraform Labs has been dealt a series of blows, including a $78 million fine for tax fraud and an investigation into the liquidation of its Korean business only days before the LUNA collapse. Government agencies are adding to the chaos today by launching an inquiry into the Luna Foundation Guard’s Bitcoin (BTC-USD) holdings. After the Guard failed to preserve the network using these money, a police agency in Seoul is investigating whether they were embezzled.
As if the legal turmoil wasn’t enough, Kwon also had Terra insider “FatMan Terra” as a thorn in his side. Kwon allegedly lied about not holding any Luna Classic (LUNC-USD) and hoarded millions of the coins in several shadow wallets, according to this source. Kwon reportedly used these monies to influence governance initiatives in order to disrupt the community’s will.