Terra Luna cryptocurrency collapses 98%, investors lose life savings

The dramatic crash of Terra (Luna), ranked among the top 10 most valuable cryptocurrencies, has wreaked havoc in the lives of investors who are feared they will become homeless after the crypto mayhem.

Within the last 24 hours, its market cap dropped from above $40 billion to just $500 million, fallen by more than 99 per cent and leaving investors nowhere to go.

Terra was once ranked among the top 10 most valuable cryptocurrencies.

It dropped below $1, having peaked close to $120 last month, reports Independent.

"I lost all my life savings. Had bought Luna at $85, not sure what to do," wrote a Terra investor on Reddit community forum.

Another investor lost $15,000 after failing to sell it when it was trading above $100 last month.

"I got greedy hoping to get more money so I can at least afford a downpayment for a house for my family. I guess no house and savings then," the user posted.

Another user on the Reddit forum posted that "I lost over $450,000, I cannot pay the bank,a while another said: "I will lose my home soon. I'll become homeless."

Crypto exchange Binance temporarily suspended withdrawals on Terra.

Do Kwon, who founded Terra creators Terraform Labs, tweeted: "I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this."

Terra said that the "prevailing peg pressure on $UST from its current supply overhang is rendering severe dilution of $LUNA".

Terra has adopted UST as a stablecoin which is linked to an underlying asset, such as gold or US dollar.

"The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads," it tweeted.

It proposed to burn the remaining UST in the community pool.

"TFL will burn the remaining 371 million UST cross-chain on Ethereum. TFL just staked 240 million $LUNA to defend from network governance attacks," it added.

--IANS

na/vd