Lehman Brothers Of Crypto? Community Reacts To Terra (LUNA) Downfall

Some members of the cryptocurrency community have equated the chaos unfolding within Terra’s LUNA/USD ecosystem to the Lehman Brothers collapse.

What Happened: On Monday, Terra’s algorithmic stablecoin TerraUSD UST/USD lost its peg to the U.S. dollar and fell to $0.79.

Terra’s Luna Foundation Guard (LFG) then proceeded to sell the entire $1.3 billion worth of its Bitcoin reserves in an attempt to bring LUNA back to parity with UST, adding a significant amount of sell pressure to an already tumbling Bitcoin.

Market participants took to Twitter to voice their concerns over the past day’s events.

“The whole concept of creating a stable asset by backing it with volatile assets seems completely insane,” said Alexandre Lores, founder of The Latest Block.

Meanwhile, Erik Yakes, author of Bitcoin and the Monetary Revolution, suggested that UST not having a central bank to “bail them out” was actually a good thing.

“This is how the market should be. When banks fail, they fail, because you can't print more Bitcoin,” he said.

At the time of writing, UST was still yet to stabilize and reclaim its peg. Some major crypto exchanges, including Binance, suspended UST and LUNA withdrawals.

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