Terra's LUNA Dumps After Wonderland Controversy

The native token of the Terra blockchain dropped sharply after it was confirmed a QuadrigaCX co-founder is tied to the Wonderland project.

Jan 28, 2022 at 9:49 p.m. UTC
Updated Feb 1, 2022 at 10:01 p.m. UTC

Helene is a U.S. markets reporter at CoinDesk, covering US economics, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

LUNA, the native token of the Terra ecosystem, is suffering the effects of negative sentiment after Thursday’s Wonderland drama.

The token, which backs Terra's algorithmic UST stablecoin, was down over 17% on Friday morning, according to data from CoinMarketCap. It traded as low as $47.56, the lowest price since November. Recently, LUNA was changing hands at $51.89, down from its all-time high of $100.17 in December.

The price drop comes a day after pseudonymous Twitter user “Zach” exposed a core member of the Wonderland project to be Michael Patryn, the co-founder of the infamous Canadian exchange QuadrigaCX.

The effects of that revelation made its way to the markets relating to another project also run by Wonderland founder Daniele Sestagalli, Abracadabra. The kerfuffle is affecting Terra because UST can be staked to lend out MIM, a stablecoin that is soft-pegged to the U.S. dollar and minted by the Abracadabra lending platform. The price of LUNA is tied to the total value locked of the UST stablecoin.

Canada-based QuadrigaCX, thought to be a Ponzi scheme, famously collapsed in 2019 after its main founder, Gerald Cotten, was said to have died in India. Patryn and the remaining partner claim they lost access to C$115 million in customer funds. That wasn’t the only controversy surrounding Patryn; he also pleaded guilty to credit and bank fraud in 2005 and admitted to burglary, theft and computer fraud in 2007.

However, Sestagalli seems to be uninterested in the past, posting a message Thursday, “I am of the opinion of giving second chances.”

In response to the drama and Sestagalli’s handling of the situation, TIME, the native Wonderland token, dropped 32%.

Similarly, MIM slipped off its dollar peg in a sharp drop, trading at $0.93 during Thursday afternoon trading hours. The coin rebounded quickly and was recently at $0.98.

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Helene is a U.S. markets reporter at CoinDesk, covering US economics, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

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Helene is a U.S. markets reporter at CoinDesk, covering US economics, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

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