Terra’s USTC in Crisis: Community Halts Minting to Keep Coin Alive
Terra LUNA Classic community attempts to save the token by halting USTC mining | Credit: Shutterstock
Key Takeaways
- Terra Classic community voted in favor of halting the UST-LUNA swapping mechanism.
- The community also voted to halt all minting and reminting of USTC which depegged from the US dollar last year.
- Terraform Labs founder Do Kwon is still a fugitive in Montenegro.
Terraform Labs’ stablecoin USTC depegged from the US dollar in May 2022 when the issuing company collapsed. As a result, USTC now trades at around $0.0126 per token.
In an attempt to salvage the value of Luna Classic, another token issued by the company, the community voted on breaking up the USTC-LUNA trading pair, and halting all minting and reminting operations for USTC.
LUNA Community Vote
“This proposal would stop all minting and reminting of USTC without the approval of the Terra Classic community. This proposal also stops loopholes such as converting xUST to mint USTC,” reads the description on the proposal .
UST experienced an initial crash in May 2022 when it unpegged from the US dollar due to the sale of a large number of tokens by two traders. Terraform Labs and three supporters injected $2 billion to stabilize it temporarily.
However, the sell-off continued, depleting the funds, inflating the price of UST’s sister token LUNA, and causing both LUNA and UST to plummet.
“We pay the Algo Quant team to re-peg USTC to USD, and the Terra Classic community is participating in the burning of the USTC supply, which also facilitates the re-peg. This proposal protects the community and outside investors who are burning USTC helping to achieve the repeg. Any form of minting or reminting goes completely against any community effort,” explains the vote proposal.
So far, the vote gained a 59% approval rate, signaling a potential end to all USTC minting and the end of the swapping function between the stablecoin and Luna Classic.
Do Kwon Still On The Run
In the meantime, Terraform Labs founder Do Kwon is still in Montenegro, on the run from law enforcement agencies in the United States and South Korea, his country of origin.
Kwon was arrested in Montenegro as he attempted to fly to the UAE using counterfeit travel documents. Do Kwon posted bail worth €400,000 awaiting a trial regarding his false documents case.
Do Kwon’s residence in Montenegro serves as an opportunity to avoid law enforcement forces in the US and South Korea as the balkan nation does not have an extradition agreement with either of the countries.
In the meantime, the Swiss government seized Do Kwon’s assets stored in Zurich, Switzerland, digital asset bank, Sygnum, worth more than $26 million in value, including Bitcoins.
