Korean exchanges agree on emergency system in case of Terra-style collapse

June 16, 2022 Coin Telegraph

Korean exchanges will soon be required to list tokens based on the same guidelines to ensure compliance with local regulations, and make emergency decisions together to prevent another Terra fiasco.

Korea's leading exchanges have agreed to form a new emergency system that will spring into action within 24 hours should another Terra-style collapse threaten to come to pass.

Under the new system, exchanges will convene to respond to sudden adverse market effects, such as what happened with Terra in May.

The agreement came after five of the country’s largest crypto exchanges, Upbit, Bithumb, Coinone, Korbit, and Gopax attended a session at the National Assembly, South Korea’s legislature to address market fairness on June 13, according to a report from local news outlet Daily Sports.

Exchange leaders, members of National Assembly, and Financial Supervisory Services (FSS) Chairman Lee Bok-hyeon discussed aspects of a new code of conduct exchanges will voluntarily adhere to in order to protect investors.

The new code will also see the rollout of a warning system in September to signal investors of unusually high-risk virtual assets due to abnormal changes in price or other unusual activity.

In October, listing guidelines will be reviewed and a regular evaluation system will be put in place for all listed tokens.

In May, the collapse of the Terra ecosystem led to tens of billions of dollars in losses and a slew of legal troubles for the founder, Do Kwon, who was confirmed to have evaded about $40 million in taxes through Terraform Labs.

The code aims to systemize token listings and delistings to maximize regulatory compliance and eliminate differences in listing guidelines between each exchange.

Korean market lead from Ledger Jun Hyuk Ahn told Cointelegraph on Thursday that this new direction would bolster investor confidence in crypto exchanges that have been on shaky ground for years. He said “It’s too early to predict exactly what will happen, but it should bring more harmony to the market.”

“More transparency on listing and delisting processes will help bring back the trust from crypto traders that were lost through the Luna incident.”

Domestic exchanges have taken the brunt of the blame for letting investors trade LUNA as it crashed. The number of Korean LUNA holders grew by 180% between May 6 and May 18th from 100,000 to about 280,000. In that time, the Terra USD stablecoin had de-pegged and LUNA fell from over $60 to under $0.01. The new guidelines would aim to prevent exchanges from allowing investors to trade such highly volatile tokens by shutting down trading within 24 hours or delisting them entirely.

LUNA holders in Korea

Before the crash: 100k
After the crash: 280k

Koreans are just made different. pic.twitter.com/WltM1RTcny
— Jaemin Park (@jaemin_eth) May 24, 2022

On the other hand, a local report from News1 on Wednesday stated that exchanges could be losers in the long-run if the guidelines are established. The report opined that the stringent new listing guidelines would hamper the exchanges’ ability to generate revenue from altcoin listings.

“Domestic exchanges often secure profits by listing altcoins that are not listed by competitors because altcoin trading volumes are quite high.”

Korea's exchanges have been sharing the spotlight with the South Korean founder and CEO of Terraform Labs, Do Kwon. Kwon has been under investigation by the feared Financial and Securities Crime Investigation Team, otherwise known as the Grim Reapers of Yeoui-do, for alleged malfeasance and tax evasion.

On June 15, the Grim Reapers uncovered documents from the Seoul tax office which they claim confirm Kwon and Terralabs evaded about $40 million in corporate and income taxes in 2021 according to The JoongAng news outlet.

Kwon has denied the allegations of money laundering and tax evasion, including one claiming he has cashed out over $2.7 billion over the past three years from the Terra ecosystem. However, the SEC still wants to see Kwon at the US Court of Appeals on charges of selling unregistered securities through the Mirror Protocol.

Anchor dev claims he warned Do Kwon over unsustainable 20% interest rate

June 9, 2022 Coin Telegraph

Coin Telegraph

Mr. B alleges that the platform was designed to only offer an interest rate of 3.6%, but that changed at the last minute.

Anchor protocol was originally designed to offer an interest rate of 3.6% but this was dialed up to 20% just a week before release to attract more investors, a core developer alleged in an interview with Korean media outlet JTBC.

“I did not know that this would go out with such a high-interest rate. Set to 20% just a week before the release,” said the employee, referred to only as Mr. B in the Korean-language report.

“I thought I was going to collapse from the beginning. (I designed it), but it collapsed 100%”

Mr. B said the platform was designed to only offer an interest rate of 3.6% and this was a key component of keeping the Terra ecosystem stable as it took into account the available funds in Anchor’s war chest.

Mr. B revealed however that a week before launch, the developers found out that the plans had been changed, giving investors access to a very high 20% interest for locking up their UST stablecoins in the Anchor Protocol instead.

The JTBC also claims it had obtained internal design documents made by Terraform Labs, which wrote about attracting investors with high-interest rates.

The developer said he attempted to take this issue up with Terra Luna founder Kwon Do-Hyung (Do Kwon) just ahead of the launch in April 2019.

“Just before the release, I suggested to CEO Kwon Do-Hyung that the interest rate should be lowered, but it was not accepted."

The dramatic fall of Terra (LUNA) and the algorithmic stablecoin UST has led to plans by the South Korean government to launch a new Digital Asset Committee in June, to serve as a watchdog over the country’s crypto industry responsible for policy preparation and supervision.

Do Kwon has been summoned to attend a parliamentary hearing on the matter in South Korea in mid-May.

He has also found himself in hot water after court documents revealed he dissolved Terraform Labs Korea just days before the LUNA crash.

In May, South Korean authorities also reportedly issuing subpoenas to employees of Terraform Labs, looking into whether there was intentional price manipulation and whether the tokens went through proper listing procedures.

Despite this, the Terra co-founder has managed to relaunch the collapsed network on May 28 with a new chain called Terra 2.0 (Pheonix-1), aimed at reviving the fallen Terra (LUNA) and TerraUSD (UST).

Avalanche drops 30% on fears Terra’s LFG will dump AVAX next

May 11, 2022 Coin Telegraph

Altcoin

Luna Foundation Guard is emptying its crypto reserves to bring its stablecoin back to its $1-peg, risking a massive AVAX selloff.

Avalanche (AVAX) is paying the price for being one of the collateral assets that maintain Terra's native stablecoin TerraUSD's (UST) peg with the U.S. dollar.

Major AVAX dump ahead?

AVAX's price dropped about 30% to reach $32.50 on May 11, its lowest level since September 2021. Its massive intraday decline coincided with UST dropping to as low as 23 cents, which effectively dented its stablecoin status among traders and investors alike.

The de-peg incident happened despite Luna Foundation Guard, a Singapore-based nonprofit backed by TerraLabs, emptying its crypto reserves to prop up the UST peg. The firm currently holds 1.97 million AVAX worth nearly $74.75 million, according to data shared by analyst CrypOrca.

*Luna Foundation Guard reserves. Source: CryptOrca*

A similar sentiment can be witnessed in the LUNA market, another crypto LFG holds as collateral to back UST. LUNA's value dropped by 85% on May 11, its worst daily performance.

Bearish AVAX price technicals

Avalanche bulls attempted to save AVAX from falling below a key support line near $36, coinciding with the 0.238 Fib line of the Fibonacci retracement graph stretched from the $0.29-swing low to the $34.52-swing high.

Their efforts helped the token recoup almost 22% of its May 11 losses, with its price rebounding from $32.50 to over $39.50.

But a full-fledged bullish reversal appears unlikely as AVAX's upside retracement faces one strong resistance after another.

Initially, the token now eyes a run-up toward a support-turned-resistance area, marked as the accumulation zone in the chart below. The upside target coincides with the 0.618 Fib line around $67.

*AVAX/USD daily price chart. Source: TradingView*

A decisive close above the zone could have AVAX test its 50-day exponential moving average (50-day EMA; the red wave) near $69 and its 200-day EMA (the blue wave) around $74 as next resistances.

But AVAX also faces headwinds from a higher interest rate environment that has dampened buying sentiment across the crypto market.

This could prompt the AVAX/USD pair to retest $36 as support for a breakdown move, which risks leading the price toward $20, an important price floor from February-April 2021.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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