In May 2022, Terra/LUNA, a blockchain platform, experienced a collapse due to the failure of its algorithmic stablecoin, TerraUSD (UST). UST's price stability was maintained through the minting and burning of LUNA tokens, but when investors started withdrawing their funds from the platform, UST lost its peg to the US dollar. The value of UST dropped to $0.10, causing LUNA's value to crash from $80 to $0.0001. This collapse had a significant impact on the entire cryptocurrency market, leading to a broad-based sell-off and a decline in Bitcoin's price. The incident also highlighted vulnerabilities in the crypto ecosystem and attracted regulatory scrutiny. Large crypto companies that were exposed to UST and LUNA suffered losses and were forced to shut down. Do Kwon, the face of the project, faced legal trouble and was arrested on fraud charges. His trial is scheduled to start in early 2026.



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