- The LUNA/Terra USD collapse has been discussed non-stop for three days in the crypto space
- The mainstream media has also been reporting on the collapse of the algorithmic stablecoin
- The takes were, in the main, as would be expected
This week’s LUNA and Terra USD collapse has led to much debate in the Twitter space over the methodology behind the protocol, the actions of operator Do Kwon, and the investment practices of those who had borrowed money to invest. However, the collapse has also made headlines in the mainstream media, so how did those traditionally anti-crypto outlets report on the events? Let’s find out.
The Independent focused on the impact of LUNA’s collapse on those who had staked everything on its success, scanning Reddit for stories of luckles, overexposed holders. The paper reported that some had lost all their life savings while others regretted not selling when LUNA was at $100, a decision that has left them potentially homeless:
I should’ve cashed out when it was $100, then I would have been up $25,000,” wrote Reddit user No-Forever. “But I got greedy hoping to get more money so I can at least afford a downpayment for a house for my family. I guess no house and savings then.
The Independent added that “Leading crypto exchange Binance temporarily suspended withdrawals on Terra (LUNA) network at one point, meaning that even those who wanted to sell were unable to.” This is of course incorrect, although traders did find that orderbooks were frozen at times.
The crypto-hating Financial Times went with the regulatory aspect, citing Treasury Secretary Janet Yellen’s mentioning of the LUNA/UST case during a Financial Stability Oversight Council meeting on Tuesday.
The Financial Times also cited the Federal Reserve’s recent report on stablecoins, which noted that even stablecoins backed by reserves “may lose value or become illiquid during stress”, adding that “these vulnerabilities may be exacerbated by a lack of transparency regarding the riskiness and liquidity of assets backing stablecoins”.
This has been the case this morning with Tether, which briefly lost its peg (and caused some to lose their minds) due to a glut of people wanting to exit the market.
The equally anti-crypto The Guardian wondered whether the LUNA episode would spell the end for the entire crypto space (of course they would), asking if it was the space’s “Lehman Brothers moment”. The paper channeled some of the more fringe attitudes of the crypto space when it looked at the possible consequences:
Now, some are asking, if Terra could drop from a market cap of more than $45bn to less than $5bn in two days, what else in the system is on shaky territory? Could USDC or Tether collapse in a similar way? And if they went, what else would follow?
You can practically hear the lip smacking as the writer contemplates the collapse of the entire crypto space, despite the newspaper reporting on similar collapses over the past ten years plus.
LUNA Killed Crypto?
This is just a sample of the approaches taken by mainstream media outlets, many of whom simply tapped up their on-call experts to explain the complexities of the Terra USD protocol. If the collapse of LUNA and Terra USD does indeed precipitate a market-wide collapse we can expect more headlines of how greed killed the crypto space (again) and that crypto is now dead (again, again).