Terra / LUNA / UST collapse
The algorithmic stablecoin TerraUSD (UST) lost its dollar peg in May 2022 and, with its sister token LUNA, collapsed. The SEC and DOJ cited about $40 billion in investor losses; co-founder Do Kwon was sentenced to 15 years.
Also known as: Terra, Terraform Labs, Do Kwon, LUNA, TerraUSD, UST, Anchor Protocol
Summary
TerraUSD (UST) was an algorithmic stablecoin that, together with its sister token LUNA, lost value rapidly in May 2022 after UST de-pegged from the U.S. dollar. The SEC and DOJ stated the collapse wiped out roughly $40 billion in market value. [1][2]
Allegations
The SEC charged Terraform Labs and co-founder Do Kwon with securities fraud, alleging they misled investors about UST's stability and about the use of the Terra blockchain, and that UST had been "secretly" manipulated to restore its peg during an earlier 2021 wobble. [2][3] A jury found Terraform and Kwon liable for securities fraud in April 2024, and they agreed to pay more than $4.5 billion. [2]
Outcome
Do Kwon was extradited to the United States, pleaded guilty, and in December 2025 was sentenced to 15 years in prison and ordered to forfeit over $19 million. [1]
Bracketed numbers refer to the numbered sources listed below.
Sources (3)
See also
World Liberty Financial (WLFI) — Justin Sun token freezeProjectsWLFI, a DeFi project linked to Donald Trump and his family, blacklisted/froze the wallet of major investor Justin Sun in Sept 2025 — ~540–595M unlocked WLFI tokens (~$107M) plus ~2.4B locked. Sun sued, alleging an undisclosed admin 'blacklist backdoor'; WLFI denied it and threatened a countersuit. The dispute is ongoing.
Gala Games exploitTokensOn May 20, 2024 an attacker abused a privileged minter account on the GALA token contract to mint 5 billion GALA (≈$200M+ nominal) and dumped ~600M of them for ~$22M of ETH before Gala froze the address. Gala Games called it an internal access-control failure; the attacker later returned the ~$22M.
This page was last updated on Jun 15, 2026. View revision history.
