Terra (LUNA2) reversed some of its losses on June 9, as its price per token jumped 67.5% on the day, catching many traders off guard on their perpetual swap positions.
LUNA2 traders are shorting it
In detail, the price of LUNA2 surged from $2 to as high as $3.58. The intraday volatility coincided with the liquidation of nearly $4 million worth of LUNA2 trades on Binance and Bybit, including short positions worth $2.46 million, according to Coinglass data.
Interestingly, LUNA2’s funding rates on Binance and Bybit are still negative, suggesting traders are still short despite the price rally.
Shadow Wallet FUD
The downside sentiment in the LUNA2 market is largely due to its underperformance in recent weeks, mainly due to its association with Terra, an algorithmic stablecoin project whose native tokens LUNA Classic (LUNAC; formerly LUNA) and TerraUSD (UST ) crashed in May.
Terraform Labs (TFL), the company behind the Terra blockchain, formed LUNA2 from the ashes of a $40 billion project. It distributed the improved tokens via airdrops to investors who lost money on their LUNC and UST investments.
It appears that these LUNA2 recipients decided to sell their tokens to cover some of their losses, pushing the price down by 85% less than two weeks after the price peaked at $12.24.
Investors may also distance themselves from LUNA2 due to TFL’s founder/CEO Do Kwon falsely claiming to own zero LUNAC tokens. Notably, a self-proclaimed Terra insider under the pseudonym “Fat Man” claims that TFL and Kwon have 42 million LUNAs worth over $200 million.
Do Kwon has said several times that TFL’s new LUNA tokens will be zero, making Terra 2 “community-owned.” This is an outright lie that no one seems to be talking about. In fact, the TFL has 42 million LUNAs worth over $200 million, and they’re lying. (1/6) pic.twitter.com/D1HIWpAWHG
— FatMan (@FatManTerra) June 6, 2022
The user also revealed five “shadow wallets” containing 42.81 million LUNA2s (worth over $110 million at June 9 prices), noting that they all belong to Kwon.
“[Do Kwon] Approve *his own proposal* through governance manipulation using his shadow wallet (TFL shouldn’t vote), tell everyone it’s going to be a community-owned chain, and give yourself a nine-digit score,” Fatman claimed, adding road:
“These are just verified wallets – there are many others.”
TFL, Kwon under investigation
LUNA2 has struggled amid increasing scrutiny surrounding the TFL, especially after it was fined $78 million by South Korea’s tax watchdog in May.
Related: Anchor dev claims he warned Do Kwon of unsustainable 20% rate
What’s more, South Korean prosecutors and police launched an investigation after accusing a TFL employee of embezzling an undisclosed amount of Bitcoin (BTC) from the company.
Additionally, the U.S. Securities and Exchange Commission (SEC) is also investigating whether TFL’s crypto tokens are illegal and unregistered securities.
Sadly, those holding $LUNA or $UST will most likely never get their money back despite the fork.
Best fuck of the year award to @stablekwon.
— NFTeddy (@TeddyCleps) June 9, 2022
Therefore, there is a good chance that the price of LUNA2 will move lower in June due to ongoing issues with TFL, legal pressures, and overall bearish sentiment.
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