Terraform Labs, and its co-founder Do Kwon, have recently shifted $62 million in Bitcoin from a wallet identified by Arkham. The monitoring company has observed that 1,075 BTC were moved to a new address. Whether Do Kwon, who is currently awaiting extradition in Montenegro, is behind this action remains unconfirmed. The wallet now holds only $2 million worth of BTC.
Why Did Terra Move the Funds?
Following the 2022 collapse of their stablecoin, the price of LUNA Coin plummeted alongside UST, causing a massive downturn for Terra. Investors, hoping to capitalize on the volatility, suffered heavy losses. The Terra team announced a rapid inflation of LUNA supply as the price tanked from double digits to nearly zero.
What Happened to the Promised BTC Reserves?
Do Kwon had pledged to create substantial Bitcoin reserves to back the stablecoin, but he has remained silent on the status of these assets, which were transferred to a market-making company. Throughout 2022, discussions revolved around these missteps and possible abuses by the Terra leadership.
After serving a four-month prison term, Do Kwon was released in Montenegro. However, his extradition to the USA or South Korea is still pending, with conflicting decisions from local and high courts adding to the confusion.
Investor Insights
Concrete and valuable inferences for investors:
- Close monitoring of wallet activities is essential for transparency.
- Rapid inflation of supply can devastate coin value; be cautious.
- Legal issues of key figures can heavily impact coin stability.
LUNA Coin Analysis
The current chart outlook for LUNA Coin is grim, exacerbated by the uncertain status of its leadership. If the $0.31 support level fails, the price could fall to $0.25. Conversely, any hopes for recovery hinge on reclaiming $0.55, a challenging feat under present conditions.
Should Bitcoin enter a recovery phase, LUNA Coin might see speculative attempts to reach $0.55. However, given the diminished investor risk appetite and the ongoing issues with Do Kwon and his team, short to medium-term improvements appear unlikely.