Did Terra operators bail out UST whales during the catastrophic crash, leaving retail investors holding the bag? The rumor mill is churning, and allegations are surfacing about preferential treatment during the TerraUSD (UST) collapse.
The Accusations: UST Whales Given Priority?
The core of the controversy centers on accusations that certain "operators allegedly allowed a few UST whales to cash out at close to 100 cents in the dollar," according to a report. This would have occurred while the algorithmic stablecoin was rapidly depegging, causing significant losses for smaller investors who held on.
Several large Terra holders exited their positions, while retail holders kept accumulating early into the crash, a report shows. This disparity fuels the suspicion that privileged access was granted to some, allowing them to mitigate their losses at the expense of others.
LFG\'s Denial and the Bitcoin Trove
Following the cataclysmic meltdown of the Terra ecosystem, the Luna Foundation Guard (LFG) has been accused of bailing out UST whales with its bitcoin reserves. However, LFG has vehemently denied these claims. In a subsequent tweet, LFG denied accusations that it bailed out whales with the bitcoin trove: “there was never any deal for ‘insiders’ to exit. LFG funds were merely…” The organization maintains its funds were used for broader market stabilization efforts.
Jump Crypto\'s Perspective on UST Outflows
While accusations persist, Jump Crypto offers a different perspective on the events leading to the UST depeg. According to Jump Crypto, the seven wallets highlighted by Nansen were “part of a much broader trend” that drove the outflows in Anchor in the beginning of the UST depeg. Jump Crypto has released a report on the crash of TerraUSD (UST), revealing that while whales were exiting their positions in the algorithmic stablecoin, retail investors kept accumulating.
Understanding the UST Crash: A Complex Event
The collapse of TerraUSD (UST) was a complex event influenced by various factors. A look into a rumour that Terra bailed out whales after the crash leaving smaller investors hung out to dry. How did TerraUSD (UST) crash? We identify two traders that broke its peg, multiple defenses that slowed its decline, and the forces that drove it to collapse. Understanding these factors is crucial to dissecting the allegations of preferential treatment and determining the true scope of any potential bailouts.
In a series of tweets, Luna Foundation Guard (LFG), the non-profit organization that supports the Terra ecosystem, revealed that some operators allegedly used top cryptocurrency reserves in an attempt to defend the peg.
The question remains: were some UST holders given an unfair advantage during the Terra crash? The investigation continues.