From just $0.014 on Friday, November 24, the former stablecoin known as Terra Classic USD (USTC) has surged by more than 500% over the weekend, to around $0.076 at press time. Although less pronounced, the associated cryptocurrencies Terra Classic (LUNC) and Terra (LUNA) recorded similar price spikes.
So what’s behind the latest rally? After Terraform Labs injected $15M into the Terra Decentralized Finance (DeFi) ecosystem last week, the associated tokens have been subject to the most bullish interest they have seen since UST lost its dollar peg in 2022. Meanwhile, media coverage of Do Kwon’s looming extradition has thrust USTC and its peers into the limelight.
After nearly a year on the run, in March, the disgraced Terra founder was arrested in Montenegro, where he has been detained ever since after being sentenced to 4 months in prison for traveling with a fake passport.
Following Kwon’s arrest, Montenegrin authorities received extradition requests from the US and South Korea. In both countries, he faces multiple fraud charges stemming from his role in the collapse of UST last year.
In a statement on Friday, November 24, 2023, a Montenegrin High Court announced that it had approved Do Kwon’s extradition to either South Korea or the United States. The country’s Minister of Justice Marko Kovač now faces the challenge of choosing which extradition request to prioritize.
While South Korea may have a stronger legal claim, political and diplomatic pressure could help secure Kwon’s extradition to the U.S..
Despite directing the world’s attention to the Terra ecosystem, Kwon’s extradition status alone doesn’t account for the recent USTC rally. Instead, it appears to have amplified bullish sentiment surrounding Terraform Labs’ latest DeFi investments
In an attempt to boost the network’s DeFi ecosystem, TerraForm Labs recently injected $15M into liquidity pools on 2 Terra-based decentralized exchanges: Astroport and Ura.
Thanks to their newfound liquidity, trading volumes on both platforms surged. Meanwhile, Terraform claimed that liquidity on Terra for blue chip assets like BTC and ETH is now deeper than any other chain in the Cosmos ecosystem.