Terra is currently going through a severe storm of legal issues (lawsuits), adoption issues, low investor confidence, and a reputational damage to the ecosystem. The newly launched Terra 2.0 ecosystem after the fall of the now renamed Terra Classic didn’t impress, but it wasn’t trivial either. Last week, the WSJ reported that Terra founder Do Kwon was determined to make the new channel a success.
In the market, the native LUNA token printed a decent green candle a few hours ago, gaining over 12% and showing signs of breaking out of a five-week dormant period. Although LUNA cooled to $2.16 at the time of writing, it is still trading up 9.05% on the day. The recent rally couldn’t have come at a better time as pressure mounted on the bulls to move or stay at the risk of being pushed below the $2.00 mark.
LUNA’s price action since the token began trading on exchanges late last month has been lackluster due to the poor state of the crypto market.
Coupled with bad faith in the token by investors who have lost a fortune, it is difficult to call a bullish outlook on LUNA in the long term. Despite climbing in the past few hours, technical analysis shows that the token is definitely unclear. Bulls need to climb a few steps to around $2.30 to inspire a rise and compete for the driver’s seat with eye-supporting bears priced at $1.65.
Do Kwon Expresses Confidence In Restoring Terra
Elsewhere, Terra creator Do Kwon shuts down all the noise that accompanied Terra’s crash early last month. Terra forked into a new channel, explicit of the algorithmic stablecoin that caused the crash, with the pre-crash channel relegated to Terra Classic. A lot has happened since then, including increased legal issues surrounding Do Kwon and the members of Terraform Labs.
In a recent report by the wall street journalDo Kwon voiced “great confidence” in the ability to rebuild Terra to its former glory. The outlet reports that Do Kwon thinks that reborn, the new chain could grow to surpass what Terra once was.
That’s such high confidence and a bold claim considering Terra’s downfall was disastrous, with UST and LUNA once having a combined market value of over $40 billion during their glory days. The LUNC token, formerly LUNA, fell from an all-time high of $120 on April 5 to $1.00 on May 11.
Developers are building, but there are skeptics
Regarding the chain resurgence course, Do Kwon noted that several developers have already pledged to relaunch their decentralized applications on the new Terra chain. The head of Terraform Labs hopes this will help increase the value of the new LUNA token. However, some have raised serious questions about why anyone would risk investing in LUNA again, after witnessing the cataclysmic collapse of its former chain.
There is not just that. There are also claims that Terra’s downfall wasn’t particularly natural but an outright case of fraud, suggesting that Do Kwon cannot be trusted. Cory Klippsten, CEO of Swan Bitcoin, is one of those who shares that the crash was intentional, he lamented that based on his social media behavior, the Terra founder is clearly a fraudster.
Do Kwon was keen to reject any such suggestion, pointing out that there is a distinction between “fail and commit fraud.” He explained that several personalities shared his vision for the future of UST, adding that his bets and his optimism on the stable coin were supported by his belief in his “resilience and its value proposition”. He admitted that he had since lost his bets, but “[his] shares match 100% [his] words.”
Legal setbacks and investigations continue
Meanwhile, a huge legal cloud lingers around all things Terra – especially in the United States and South Korea, where investigators are trying to piece together the details of Terra’s collapse. Investors in both countries have felt the brunt of this, losing millions in bets on the Terra ecosystem.
In the United States, a class action lawsuit has been filed against Do Kwon and Terraform Labs for allegedly misleading investors with false information about Terra ecosystem assets, tricking them into buying UST and LUNA at inaccurately high prices.
More recently, local media in Korea reported that the country has banned people under current and former Terraform Labs employment from leaving the country. Yonhap News said about 15 people had received travel restrictions. An official from the prosecutor’s office confirmed that the travel embargo was enforced on “Officials Tied to Stablecoin Collapse.”
The individual did not confirm how investigations into the case are proceeding. Overall, even with the optimism expressed by Kwon, the return to “normalcy” will be anything but smooth.