Terraform: crypto collapse reduces the pressure on banks and supervisory authorities

anti-authoritarian crypto fans find out where the power really lies. South Korea has banned the departure of Terraform Labs. This unusually strict measure indicates that the prosecutors escalate an investigation of the spectacular collapse of the StableCoin Terrausd.

almost heard the breath of so-called "tradfi" in global changes for the crypto sector. The pressure on the central banks to develop digital currencies is gone. The supervisory authorities are faced with a simpler task of containing an industry that is being tied up by the drop in prices.

The Luna token of Terraform was once one of the top 10 global cryptocurrencies according to the market value. Within a year he grew by over 12,000 percent. It lost 99.99 percent of its value in just 48 hours after his paired stable coin Terrausd crashed.

Investors were promised a yield of 20 percent for depositing their terrausd coins. Instead, they lost more than $ 45 billion.

The Korean authorities are investigating Do Kwon, the pronounced co -founder of Terraform Labs. An investigation is alleged tax evasion. Another reason is the alleged embezzlement of the company's Bitcoin stocks. The entrepreneur explained that he was innocent in any misconduct.

complaints from investors could set a broader pattern. They usually claim that Terrausd was dependent on incomplete algorithms that are susceptible in times of market declines. However, legislation on digital assets is sparse worldwide. This reduces investor protection. For the most part, crypto companies such as Terraform are not even classified as financial institutions.

The collapse of Terraform and the locking of withdrawal by Celsius Network, a crypto loan, shaken the industry. It was already scared of the decline of Bitcoin by more than half in response to falling share prices.

For traditional finance, crypto problems could not have occurred in a more manageable form. You have refuted allegations that the prices have not been correlated with conventional assets. You have shown that investors can easily lose their shirts. And they have hardly any effects because the sector is still relatively unconnected and small. For example, the total value of the StableCoin assets of around $ 190 billion is less than one percent of the market value of US shares of $ 50 trillion.

Supervisory authorities cannot avoid every bullet. Investors who like to collect unregulated profits are still looking for compensation for unregulated losses. Excessive collecting lawsuits prove this.

According to the current market cleaning up, financial supervisory authorities around the world must cut regulated territory out of the crypto-eagles. The resistance should be helpful.