- Two major cryptocurrencies, TerraUSD and LUNA, crashed dramatically in the past week.
- Insider spoke with three investors who lost thousands of dollars as the coins imploded.
- Corey, who told Insider he’s on disability because of a work accident, said he’s lost over $30,000.
The crypto market witnessed one of its most striking breakdowns this month as TerraUSD, one of the biggest algorithmic stablecoins, fell apart. The cryptocoin dropped from its intended value of one US dollar to currently hover around ten cents, leading to buyers suffering devastating losses.
Originally created in 2018 by the 30-year-old Do Kwon, TerraUSD – often abbreviated as UST – was meant to be perpetually pegged to the value of one US dollar and offer stability. TerraUSD was paired with another coin, LUNA, which it could be exchanged for and had a price that could fluctuate. When the balance between these two coins became unstable in recent weeks, investors panicked and the equivalent of a bank run on the cryptocurrencies caused UST to lose over 90% of its value and LUNA went from around $80 one month ago to worth less than a cent this week.
As the TerraUSD project imploded and other cryptocurrencies saw downturns – Bitcoin has lost around half of its value in the past six month – investors who bought into the idea of reaping huge profits or finding stability in UST have faced the realities of a volatile market and sudden financial disaster.
Insider spoke with three people, who requested their full names not be used because of privacy concerns, who lost thousands of dollars in the crypto crash. They shared how the saga has impacted their lives.
Corey, a 37-year-old from Canada, told Insider he originally got into LUNA in November 2021 after searching through reviews and reading Reddit comments.
“It appeared to me to be an incredible project,” Corey said.
He’s now lost over $30,000 since the nosedive began, he told Insider. While he still has a little over $1,000 in profits from other investments like Reddit-favorite GameStop, his world has been rocked by the sudden crisis. He used to be employed doing both auto-manufacturing and industrial flat-roofing jobs, he said, but turned to crypto after getting injured and now has trouble walking.
“I’m on disability because I was in a major work accident, someone didn’t properly install temp stairs and they failed,” Corey said. “So as you can imagine, I’m devastated.”
As the coin dropped, the main subreddit for UST and LUNA, r/terraluna, was overloaded with investors speculating on what happened and mourning their losses. Some users who claimed to have poured tens of thousands of dollars into the coin said they didn’t know how they would recover and mentioned self-harm. Others lashed out at Kwon, who previously derided critics who expressed concern about the stablecoin on social media. Amid the chaos, the subreddit was locked against new posts last week, although users can still comment on preexisting threads.
The severity of the losses varies from people who claim to have lost millions to others who had only dipped into crypto more recently out of curiosity. A 21-year-old Computer Science student from Slovenia told Insider he got involved with UST at the start of April. It was his first crypto investment and he was hoping to buy an electric car with the money, he wrote in a Reddit comment. The crash means that’s no longer possible and he’s lost $2,200, he said.
Others in the Reddit forum posted that the token’s loss of value would have serious ramifications not just for themselves, but their families as well.
Jen, a 34-year-old teacher, told Insider she got into crypto and LUNA a little over a year ago after hearing about it from her brother. She initially invested $1,000 and then added more every month or so, she said. She also holds other cryptocurrencies like Bitcoin, Ethereum, and Solana.
“I truly believed it was a solid project,” Jen said of LUNA. “Did my research and got involved in the community.”
But when LUNA crashed, she said she lost over $17,000. Jen wrote in a Reddit post last week that if she had cashed out when LUNA was worth $100, which was around early April, she would’ve collected over $25,000. She wanted a downpayment on a house, she wrote, and had gotten greedy.
The collapse has now dashed her hopes of buying a home for herself and her children.
“We are currently renting an apartment and hoping to be able to afford sky high prices of houses here in the US,” she said. “But I guess with the money gone, no house for us and have to get by with what is left.”