How Early LUNA Holders, Founders Made It With $6 Billion


The crash of Terra (LUNA) will go down in crypto history as one of the most catastrophic events. Billions of people lost their savings and investments. Meanwhile, a small group of insiders took advantage of it.

Related literature | LUNA Classic Rises 90% After Supporting Crypto Exchanges

According to an report from Arcane Research analyst Anders Helseth, the Terra (LUNA) ecosystem, now known as Terra Classic, worked as a long-term “pump and dump” scheme.

The analyst investigated on-chain activity to back up his claims and found revealing information about LUNC’s distribution and value influx, how token offerings moved from one group of addresses to another, from exchange platforms from 2020 to a few days before. the collision.

The analyst called the Terra Classic ecosystem the “perfect exit liquidity” for early LUNA holders. This scheme was supported by the high popularity in the Anchor Protocol, the UST (Terra Classic’s algorithmic stablecoin) and LUNA mint mechanism, and the offering of this token.

As seen below, LUNA’s offering was “highly concentrated” by Terraform Labs (TFL), the Terra Classic development company co-founded by Do-Kwon. Excluding exchange platforms, TFL held over 537 million LUNA tokens as of October 3, 2020.

Source: Arcane Research

The analyst claims that unidentified portfolios founded by Terraform Labs, the largest LUNC holder, have moved their money into “bridges and centralized exchanges.” The funds started moving in late 2020, seeing trades “often” from TFL to as many as 3,000 unidentified portfolios.

A total of $6 billion in net outflows was recorded between Terraform Labs to these bridge/exchange portfolios. As can be seen below, these funds were later transferred to the “other” group of portfolios.

In other words, according to the analyst’s research, Terraform Labs appeared to have moved their LUNA stock to exchanges where they were bought by retail investors. The ‘other’ portfolios saw net inflows of $6.5 billion.

Source: Arcane Research

Did the LUNA Crash Make Billions of Early Investors?

In theory, $6.5 billion is the profit made by TFL and early LUNC investors, but the analyst believes the number could be much higher. The report claims the following:

Therefore, we have reason to believe that the potential for creating external profits was greater than the $6 billion net flow calculated on the assumption that portions of early deposits from LUNAto exchanges were not sold.

Thus, the report claims that the Terra Classic ecosystem, which boosted the popularity and upward volatility of the price of LUNA (LUNC), created “exit liquidity” for these investors. The analyst concluded the following about the alleged mechanism that allowed early LUNC investors to transfer value to retail investors:

Pumping the LUNA token, the burn/mint mechanism, and creating a sustained demand for the UST token through Anchor created the perfect exit liquidity for large LUNA bags (…). At best, the gains can be described as collateral gains on a failed bootstrapping attempt.

Related literature | Daily Pump & Dump | May 31, 2022 Crypto Market Report

At the time of writing, LUNA is trading at $9 with a 3% loss on the 4-hour chart.

LUNA is trending downward on the 4-hour chart. Source: LUNAUSDT Tradingview

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