Luna (Terra) is a cryptocurrency created by Terraform Labs to support its blockchain ecosystem, but it became infamous after a catastrophic collapse in 2022 that wiped out over $40 billion in investor value.
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š What Luna Is
- Origin: Luna was launched by Terraform Labs, co-founded by Do Kwon in South Korea.
- Purpose: It was designed to work alongside TerraUSD (UST), an algorithmic stablecoin.
- Luna tokens were used to stabilize USTās value by a mint-and-burn mechanism.
- Ecosystem: Part of the Terra blockchain, which aimed to create decentralized finance (DeFi) applications, payments, and stable digital money.
š The Collapse
- In May 2022, Lunaās price crashed from $87 per token to less than $0.00005, triggering one of the largest wipeouts in crypto history.
- The collapse destroyed confidence in algorithmic stablecoins and contributed to the broader ācrypto winterā of 2022.
- Over $40 billion in investor funds were lost.
āļø Legal Fallout
- Do Kwon, Terraform Labsā co-founder, was arrested and in December 2025 sentenced to 15 years in prison for fraud, wire fraud, and securities violations.
- Courts described the scheme as a āfraud of epic generational scaleā, noting that prices were artificially propped up by hidden deals with trading firms.
š Current Status
- After the collapse, the original Luna was renamed Terra Classic (LUNC).
- A new chain, Terra 2.0 (LUNA), was launched in 2022 to try to rebuild the ecosystem.
- As of December 2025:
- Price: Around $0.17 per token
- Market Cap: ~$125 million
- Circulating Supply: ~710 million tokens
š Quick Comparison
| Feature | Luna (Original) | Terra Classic (LUNC) | Terra 2.0 (LUNA) |
|---------------------------|-----------------|----------------------|------------------|
| Launch Year | 2018 | 2022 (post-crash) | 2022 (Phoenix-1 chain) |
| Purpose | Stabilize UST | Legacy chain | Rebuild ecosystem |
| Collapse | May 2022 | Exists but devalued | Active, ~$0.17 price |
| Market Impact | $40B loss | Minimal | Small market cap |
š In short: Luna was once a flagship crypto project tied to TerraUSD, but its collapse became one of the biggest scandals in crypto history. Today, Terra 2.0 (LUNA) exists, but itās a much smaller project compared to its pre-2022 prominence.