Historia cripto
Terra and UST: the peg, the collapse and the fraud cases
The redemption mechanism explains the feedback loop; the court records explain the misleading claims surrounding it.
Los artículos de investigación y las referencias se publican en inglés. La navegación está disponible en siete idiomas.
Personas y proyectos
En este artículo
A dollar target backed by a conversion mechanism
UST was marketed as a stablecoin that maintained a dollar value through its relationship with LUNA. The design relied on incentives to convert between the assets when UST moved away from its target. It did not give every UST holder a segregated dollar sitting in a bank account. That distinction became decisive when confidence and demand deteriorated in May 2022.
Redemption pressure on a system supported by its own volatile token can become self-reinforcing. More units of the supporting token must be issued to absorb the same dollar amount when its price falls. That additional supply can intensify selling pressure. Arbitrage only helps while participants believe the assets they receive can be sold or retained without an even larger loss.
The representations were part of the case
The SEC's 2024 account described misleading statements about UST's stability and the use of Terraform's blockchain. A jury found Terraform Labs and Do Kwon liable for securities fraud in April 2024. The June settlement exceeded $4.5 billion and involved the company's wind-down through bankruptcy. A civil settlement figure is not an inventory of cash already returned to users.
The later criminal record added a separate milestone. Kwon pleaded guilty in August 2025 and received a 15-year prison sentence on 11 December 2025. The Justice Department described concealed market intervention and misleading explanations of the ecosystem's technology and stability. Those findings belong alongside the mechanism, rather than being compressed into a story about an algorithm that simply failed.
Reading the losses correctly
A fall in the combined market value of LUNA and UST does not equal a bank statement showing the amount stolen. Deposit amounts, trading losses, token valuation, civil penalties and recoveries answer different questions. The historical record is stronger when those figures remain separate.
Compare stablecoin backing models and USDC's 2023 banking disruption. Both involved a broken market peg, but the sources of support and paths to recovery differed. Treating them as interchangeable hides the dependency that actually failed.