Terra’s Crash May Have Been The Result Of An Inside Job

Terra’s Crash May Have Been The Result Of An Inside Job

Do Kwon’s Terraform Labs was in charge of the wallet recognized as a “attacker” for producing a transaction that led to the demise of UST and the Terra ecosystem.

As a consequence, according to new research published on June 14 by blockchain security firm Uppsala Security and CoinDesk Korea, the collapse of the Terra (LUNA) ecosystem, which led in tens of billions of dollars in damages to investors, was caused by acts performed inside the organization.

The evidence indicated that the attackers who assaulted Terra were not the rumored Wall Street whales, but rather the wallets and internal activity maintained by Terraform Labs itself, which is now being investigated, according to South Korean authorities.

Uppsala Security and CoinDesk Korea have been investigating the cause of the Terra project’s breakdown on May 7 for over a month, using on-chain data forensic tools. A number of research firms had reported the wallet (0x8d47f08ebc5554504742f547eb721a43d4947d0a), also known as “Wallet A,” as an attacker wallet.

Wallet A, which is based on the Ethereum blockchain, was created on May 7 at 4:32 PM, according to Coordinated Universal Time (UTC).

An attempt to de-peg the UST currency, which was meant to be pegged to the dollar, failed on the same day. Around 9:44 p.m. on the same day, Terraform Labs withdrew around 150 million USTs from the DeFi service curve, which is almost $150 million.

The Terra blockchain’s liquidity was preserved as a result of this operation. “The reason for subtracting the UST worth 150 million dollars from the curve is to provide a more stable UST liquidity,”  stated Ceo Kwon Do-hyeong in response to this question.

At 9:57 p.m. on the same day, wallet A exchanged 85 million UST for Curve, another stable coin. After Terraform Labs temporarily withdrew UST liquidity from the curve, Wallet A generated a large-scale UST transaction within 13 minutes.

After trading UST, Wallet A sent USDC to Coinbase, the largest North American virtual asset exchange. Before and after this transaction, a large amount of UST was placed in various exchanges throughout the world, hastening de-pegging and eventually leading to a bank run.

As a consequence, different blockchain research companies worldwide have identified Wallet A as the attacker’s wallet. Some thought that the wallet belonged to a Wall Street financial organization attempting to destabilize Terra.

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