<s>
Terra	B-Application
is	O
a	O
blockchain	B-Application
protocol	O
and	O
payment	O
platform	O
used	O
for	O
algorithmic	O
stablecoins	B-Protocol
.	O
</s>
<s>
The	O
project	O
was	O
created	O
in	O
2018	O
by	O
Terraform	B-Application
Labs	I-Application
,	O
a	O
startup	O
co-founded	O
by	O
Do	O
Kwon	O
and	O
Daniel	O
Shin	O
.	O
</s>
<s>
It	O
is	O
most	O
known	O
for	O
its	O
Terra	B-Application
stablecoin	B-Protocol
and	O
the	O
associated	O
Luna	B-Application
reserve	O
asset	O
cryptocurrency	O
.	O
</s>
<s>
In	O
May	O
2022	O
,	O
the	O
Terra	B-Application
blockchain	B-Application
was	O
temporarily	O
halted	O
after	O
the	O
collapse	O
of	O
the	O
stablecoin	B-Protocol
TerraUSD	B-Application
(	O
UST	O
)	O
and	O
Luna	B-Application
,	O
in	O
an	O
event	O
that	O
wiped	O
out	O
almost	O
$45billion	O
in	O
market	O
capitalisation	O
within	O
a	O
week	O
.	O
</s>
<s>
Terra	B-Application
is	O
a	O
blockchain	B-Application
that	O
leverages	O
fiat-pegged	O
stablecoins	B-Protocol
to	O
power	O
a	O
payment	O
system	O
.	O
</s>
<s>
For	O
consensus	O
the	O
Terra	B-Application
blockchain	B-Application
uses	O
a	O
proof-of-stake	B-Protocol
codesign	O
.	O
</s>
<s>
Several	O
stablecoins	B-Protocol
are	O
built	O
atop	O
the	O
Terra	B-Application
protocol	O
,	O
including	O
TerraUSD	B-Application
,	O
which	O
was	O
the	O
third	O
largest	O
stablecoin	B-Protocol
by	O
market	O
capitalisation	O
before	O
its	O
collapse	O
in	O
May	O
2022	O
.	O
</s>
<s>
The	O
Terra	B-Application
blockchain	B-Application
has	O
a	O
fully	O
functional	O
ecosystem	O
of	O
Dapps	O
such	O
as	O
Anchor	O
,	O
Mirror	O
,	O
and	O
Pylon	O
which	O
has	O
utilised	O
the	O
stable-coin	O
infrastructure	O
of	O
Terra	B-Application
.	O
</s>
<s>
Terra	B-Application
is	O
a	O
group	O
of	O
algorithmic	O
stablecoins	B-Protocol
,	O
named	O
according	O
to	O
the	O
currencies	O
to	O
which	O
they	O
are	O
pegged	O
—	O
for	O
example	O
,	O
TerraUSD	B-Application
(	O
UST	O
)	O
is	O
pegged	O
to	O
the	O
U.S.	O
dollar	O
.	O
</s>
<s>
Luna	B-Application
serves	O
as	O
the	O
primary	O
backing	O
asset	O
for	O
Terra	B-Application
,	O
and	O
is	O
also	O
used	O
as	O
a	O
governance	O
token	O
for	O
users	O
to	O
vote	O
on	O
Terra	B-Application
community	O
proposals	O
.	O
</s>
<s>
UST	O
stablecoins	B-Protocol
were	O
not	O
backed	O
by	O
U.S.	O
dollars	O
;	O
instead	O
,	O
it	O
was	O
designed	O
to	O
maintain	O
its	O
peg	O
through	O
a	O
complex	O
model	O
called	O
a	O
"	O
burn	O
and	O
mint	O
equilibrium	O
"	O
.	O
</s>
<s>
This	O
method	O
uses	O
a	O
two-token	O
system	O
,	O
whereby	O
one	O
token	O
is	O
supposed	O
to	O
remain	O
stable	O
(	O
UST	O
)	O
while	O
the	O
other	O
token	O
(	O
LUNA	B-Application
)	O
is	O
meant	O
to	O
absorb	O
volatility	O
.	O
</s>
<s>
The	O
Anchor	O
Protocol	O
was	O
a	O
lending	O
and	O
borrowing	O
protocol	O
built	O
on	O
the	O
Terra	B-Application
chain	O
.	O
</s>
<s>
Investors	O
who	O
deposited	O
UST	O
in	O
the	O
Anchor	O
Protocol	O
were	O
receiving	O
a	O
19.45	O
%	O
yield	O
that	O
was	O
paid	O
out	O
from	O
Terra	B-Application
's	O
reserves	O
.	O
</s>
<s>
Due	O
to	O
such	O
a	O
high-yielding	O
mechanism	O
of	O
the	O
Anchor	O
Protocol	O
,	O
some	O
critics	O
raised	O
concerns	O
that	O
Kwon	O
's	O
stablecoin	B-Protocol
model	O
could	O
function	O
like	O
a	O
"	O
ginormous	O
Ponzi	O
scheme	O
"	O
.	O
</s>
<s>
Mirror	O
Protocol	O
was	O
another	O
project	O
based	O
on	O
the	O
Terra	B-Application
chain	O
,	O
which	O
designed	O
and	O
offered	O
financial	O
derivatives	O
that	O
virtually	O
"	O
mirrored	O
"	O
actual	O
listed	O
stocks	O
.	O
</s>
<s>
In	O
2018	O
,	O
Do	O
Kwon	O
and	O
Daniel	O
Shin	O
(	O
also	O
known	O
as	O
Shin	O
Hyun-sung	O
)	O
co-founded	O
Terraform	B-Application
Labs	I-Application
in	O
Seoul	O
,	O
South	O
Korea	O
.	O
</s>
<s>
In	O
2019	O
,	O
Terraform	B-Application
Labs	I-Application
launched	O
its	O
first	O
cryptocurrency	O
token	O
.	O
</s>
<s>
Terraform	B-Application
Labs	I-Application
raised	O
more	O
than	O
$200	O
million	O
from	O
investment	O
firms	O
such	O
as	O
Arrington	O
Capital	O
,	O
Coinbase	O
Ventures	O
,	O
Galaxy	O
Digital	O
and	O
Lightspeed	O
Venture	O
Partners	O
.	O
</s>
<s>
In	O
January	O
2022	O
,	O
the	O
Luna	B-Application
Foundation	O
Guard	O
(	O
LFG	O
)	O
was	O
established	O
as	O
a	O
non-profit	O
based	O
in	O
Singapore	O
,	O
with	O
Do	O
Kwon	O
serving	O
as	O
its	O
director	O
.	O
</s>
<s>
Terraform	B-Application
Labs	I-Application
allocated	O
a	O
portion	O
of	O
the	O
money	O
obtained	O
from	O
UST	O
sales	O
to	O
Luna	B-Application
Foundation	O
Guard	O
,	O
to	O
be	O
used	O
as	O
reserves	O
to	O
stabilise	O
the	O
price	O
of	O
UST	O
.	O
</s>
<s>
Bitcoin	B-Protocol
was	O
the	O
largest	O
portion	O
of	O
the	O
reserve	O
assets	O
,	O
though	O
LFG	O
also	O
held	O
reserves	O
in	O
various	O
other	O
stablecoins	B-Protocol
and	O
cryptocurrencies	O
.	O
</s>
<s>
In	O
February	O
2022	O
,	O
Terra	B-Application
and	O
the	O
Washington	O
Nationals	O
Major	B-Application
League	I-Application
Baseball	I-Application
team	O
announced	O
they	O
had	O
entered	O
into	O
a	O
sponsorship	O
agreement	O
which	O
provided	O
stadium	O
and	O
television	O
branding	O
,	O
as	O
well	O
as	O
the	O
rebranding	O
of	O
the	O
Washington	O
Nationals	O
club	O
and	O
lounge	O
to	O
the	O
"	O
Terra	B-Application
Club	O
"	O
.	O
</s>
<s>
The	O
deal	O
was	O
originally	O
proposed	O
to	O
the	O
Terra	B-Application
community	O
by	O
Kwon	O
,	O
referring	O
only	O
to	O
an	O
unnamed	O
"	O
sports	O
franchise	O
in	O
one	O
of	O
the	O
four	O
major	O
American	O
professional	O
sports	O
leagues	O
"	O
,	O
and	O
the	O
community	O
agreed	O
to	O
pay	O
$38.15	O
million	O
for	O
a	O
five-year-long	O
exclusive	O
partnership	O
.	O
</s>
<s>
The	O
founders	O
Kwon	O
and	O
Shin	O
each	O
owned	O
one	O
share	O
of	O
Terraform	B-Application
Labs	I-Application
,	O
giving	O
each	O
founder	O
50%	O
of	O
controlling	O
power	O
.	O
</s>
<s>
Shin	O
and	O
Chai	O
Corporation	O
,	O
a	O
Terra-ecosystem	O
payment	O
service	O
company	O
that	O
he	O
founded	O
,	O
announced	O
on	O
18	O
May	O
2022	O
that	O
Shin	O
no	O
longer	O
held	O
any	O
ownership	O
stock	O
in	O
Terraform	B-Application
Labs	I-Application
.	O
</s>
<s>
However	O
,	O
after	O
it	O
was	O
revealed	O
from	O
sources	O
of	O
the	O
Singaporean	O
Account	O
and	O
Corporate	O
Regulatory	O
Authority	O
that	O
Shin	O
still	O
held	O
8.3	O
%	O
of	O
Terraform	B-Application
Labs	I-Application
ownership	O
,	O
Chai	O
Corporation	O
announced	O
that	O
Shin	O
was	O
not	O
able	O
to	O
"	O
finish	O
liquidating	O
his	O
remaining	O
ownership	O
in	O
time	O
"	O
despite	O
having	O
the	O
same	O
share	O
of	O
ownership	O
as	O
of	O
18	O
May	O
.	O
</s>
<s>
Over	O
the	O
next	O
week	O
,	O
the	O
price	O
of	O
UST	O
plunged	O
to	O
10	O
cents	O
,	O
while	O
Luna	B-Application
fell	O
to	O
"	O
virtually	O
zero	O
"	O
,	O
down	O
from	O
an	O
all-time	O
high	O
of	O
$119.51	O
.	O
</s>
<s>
Before	O
the	O
crash	O
,	O
Luna	B-Application
was	O
one	O
of	O
the	O
top	O
ten	O
largest	O
cryptocurrencies	O
on	O
the	O
market	O
.	O
</s>
<s>
On	O
13	O
May	O
,	O
Terraform	B-Application
Labs	I-Application
temporarily	O
halted	O
the	O
Terra	B-Application
blockchain	B-Application
in	O
response	O
to	O
the	O
falling	O
prices	O
of	O
UST	O
and	O
Luna	B-Application
.	O
</s>
<s>
Despite	O
the	O
company	O
's	O
attempts	O
to	O
stabilise	O
UST	O
and	O
Luna	B-Application
via	O
its	O
bitcoin	B-Protocol
and	O
other	O
cryptocurrency	O
reserves	O
from	O
the	O
Luna	B-Application
Foundation	O
Guard	O
,	O
the	O
1:1	O
peg	O
of	O
UST	O
to	O
USD	O
did	O
not	O
materialise	O
.	O
</s>
<s>
,	O
blockchain	B-Application
analysts	O
claim	O
that	O
the	O
usage	O
of	O
the	O
bitcoin	B-Protocol
reserves	O
of	O
LFG	O
still	O
remains	O
largely	O
uncertain	O
.	O
</s>
<s>
Likely	O
causes	O
of	O
the	O
collapse	O
included	O
mass	O
withdrawals	O
from	O
the	O
Anchor	O
Protocol	O
days	O
before	O
the	O
collapse	O
,	O
investor	O
concerns	O
about	O
cryptocurrencies	O
more	O
generally	O
,	O
and	O
a	O
drop	O
in	O
the	O
price	O
of	O
bitcoin	B-Protocol
.	O
</s>
<s>
During	O
the	O
collapse	O
,	O
holders	O
converted	O
Terra	B-Application
into	O
Luna	B-Application
via	O
the	O
mint-and-burn	O
system	O
,	O
which	O
caused	O
the	O
price	O
of	O
Luna	B-Application
to	O
collapse	O
due	O
to	O
its	O
increased	O
supply	O
.	O
</s>
<s>
On	O
25	O
May	O
,	O
a	O
proposal	O
was	O
approved	O
to	O
reissue	O
a	O
new	O
Luna	B-Application
cryptocurrency	O
and	O
to	O
decouple	O
from	O
and	O
abandon	O
the	O
devalued	O
UST	O
stablecoin	B-Protocol
.	O
</s>
<s>
The	O
original	O
blockchain	B-Application
is	O
now	O
called	O
Terra	B-Application
Classic	O
(	O
LUNC	O
)	O
,	O
and	O
the	O
original	O
Luna	B-Application
token	O
is	O
called	O
Luna	B-Application
Classic	O
.	O
</s>
<s>
The	O
new	O
Luna	B-Application
coin	O
is	O
called	O
"	O
Terra	B-Application
2.0	I-Application
"	O
by	O
investors	O
,	O
and	O
has	O
lost	O
valuation	O
in	O
the	O
opening	O
days	O
of	O
being	O
listed	O
on	O
exchanges	O
.	O
</s>
<s>
In	O
an	O
August	O
2022	O
interview	O
on	O
the	O
NFTV	O
series	O
Coinage	O
,	O
which	O
occurred	O
few	O
months	O
following	O
the	O
collapse	O
Terra	B-Application
founder	O
Do	O
Kwon	O
remarked	O
that	O
irrational	O
with	O
his	O
level	O
of	O
confidence	O
with	O
the	O
Terra	B-Application
blockchain	B-Application
system	O
before	O
the	O
collapse	O
.	O
</s>
<s>
However	O
,	O
he	O
would	O
also	O
deny	O
that	O
the	O
Terra	B-Application
system	O
was	O
a	O
ponzi	O
scheme	O
.	O
</s>
<s>
Terraform	B-Application
Labs	I-Application
Pte	O
.	O
</s>
<s>
Ltd.	O
,	O
the	O
company	O
behind	O
Terra	B-Application
,	O
is	O
incorporated	O
in	O
Singapore	O
but	O
did	O
not	O
submit	O
an	O
application	O
for	O
a	O
licence	O
under	O
the	O
Payment	O
Services	O
Act	O
according	O
to	O
The	O
Straits	O
Times	O
.	O
</s>
<s>
The	O
U.S.	O
Securities	O
and	O
Exchange	O
Commission	O
(	O
SEC	O
)	O
issued	O
a	O
subpoena	O
to	O
Terraform	B-Application
Labs	I-Application
and	O
Kwon	O
in	O
2021	O
,	O
with	O
specific	O
regard	O
to	O
Terraform	B-Application
Labs	I-Application
 '	O
Mirror	O
Protocol	O
,	O
which	O
designed	O
and	O
offered	O
financial	O
derivatives	O
that	O
virtually	O
"	O
mirrored	O
"	O
actual	O
listed	O
stocks	O
.	O
</s>
<s>
Despite	O
Kwon	O
's	O
attempts	O
to	O
dispute	O
and	O
avoid	O
investigations	O
from	O
the	O
SEC	O
,	O
a	O
U.S.	O
Court	O
hearing	O
in	O
Manhattan	O
in	O
February	O
2022	O
ruled	O
in	O
favour	O
of	O
the	O
SEC	O
's	O
right	O
to	O
continue	O
its	O
investigation	O
into	O
Kwon	O
and	O
Terraform	B-Application
Labs	I-Application
.	O
</s>
<s>
In	O
February	O
2023	O
,	O
the	O
SEC	O
charged	O
Terraform	B-Application
Labs	I-Application
and	O
Kwon	O
with	O
fraud	O
.	O
</s>
<s>
On	O
its	O
first	O
day	O
of	O
operation	O
,	O
the	O
Financial	O
and	O
Securities	O
Crimes	O
Joint	O
Investigation	O
Team	O
singled	O
out	O
the	O
Luna	B-Application
and	O
Terra	B-Application
crisis	O
as	O
its	O
first	O
investigation	O
target	O
.	O
</s>
<s>
A	O
class	O
action	O
,	O
Patterson	O
v	O
.	O
TerraForm	B-Application
Labs	I-Application
Pte	O
Ltd	O
.	O
et	O
al	O
,	O
was	O
filed	O
against	O
Terraform	B-Application
Labs	I-Application
and	O
others	O
in	O
the	O
United	O
States	O
District	O
Court	O
for	O
the	O
Northern	O
District	O
of	O
California	O
on	O
17	O
June	O
2022	O
.	O
</s>
<s>
In	O
September	O
2022	O
,	O
a	O
$56.9	O
million	O
class	O
action	O
was	O
filed	O
at	O
the	O
High	O
Court	O
of	O
Singapore	O
against	O
Do	O
Kwon	O
,	O
Terraform	B-Application
Labs	I-Application
,	O
Nikolaos	O
Alexandros	O
Platias	O
and	O
the	O
Luna	B-Application
Foundation	O
Guard	O
.	O
</s>
