The head of Ava Labs compared the collapse of the project to the hacking of the Mt. Gox crypto exchange in 2014

Avalanche Foundation lost $60 million due to Terra’s collapse

23.05.2022 - 06:30

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3 min

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What’s new? The founder of Avalanche and Ava Labs CEO Emin Gün Sirer reported that his organization lost $60 million due to the collapse of the Terra ecosystem. He revealed that the partnership between the Avalanche Foundation and Terraform Labs was aimed at improving the interoperability of their blockchains. Sirer said this in an interview with Forbes

The Forbes interview

What else did Sirer say? Terraform Labs (TFL) and the Luna Foundation Guard (LFG) invested $200 million in AVAX. The purchased cryptocurrency was to be used to back the TerraUSD(UST) stablecoin. Following its collapse, TFL and the LFG continue to hold on to AVAX, according to Sirer. He noted that Avalanche tokens are currently the most valuable thing TFL and the LFG own. Sirer added that the Avalanche Foundation has also invested about $60 million at the current AVAX rate in the Terra ecosystem, he stressed that he has no regrets about this investment. In his view, the partnership with the project could have brought Ava Labs a significant profit. As of May 23, the AVAX token is trading at $31,46 (according to Binance).

In addition, the Avalanche founder compared Terra’s collapse to the hacking of the Mt. Gox crypto exchange in 2014. This event also had a negative impact on the entire cryptocurrency industry.

What happened to Terra? On May 8, 2022, the UST stablecoin began to lose its peg to the US dollar, and on May 11 it fell to $0,22. As of May 23, UST is trading at $0,06, while its backing token LUNA is at $0,0001 (according to Binance).

On May 12, the British blogger, KSI, revealed that he lost $2,8 million on the collapse of the LUNA rate. At that time, he noted that despite hyperinflation, he had no plans to sell assets, the value of which fell to $1 000. KSI added that he would wait for the rate to recover.

On May 16, the head of cryptocurrency exchange Binance Changpeng Zhao said the loss of more than $1,6 billion in unrealized profits from its investments in the LUNA token after its rate collapsed. Venture fund Hashed, one of Terra’s investors, lost $3,5 billion in unrealized profits due to the rate collapse of UST and LUNA.

For a detailed timeline of events in the wake of the Terra ecosystem collapse, see GetBlock Magazine’s article.

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