LUNA V2 rises 800% From Lows as Terra App Mirror Protocol Suffers Exploit

LUNA V2 skyrockets as LUNC flounders

LUNA V2 rose 800% over the Memorial Day weekend after its initial 90% drop last week. This move can largely be attributed to exchanges such as OkCoin and Binance listing it. As many in the crypto world know by now, the original LUNA blockchain failed when UST depegged and trillions of LUNA were minted. Version 2 features no stablecoin.

In a last ditch effort to revive the ecosystem, Do Kwon decided to fork the blockchain with the fork retaining the LUNA name, while the original chain became known as Terra Classic (LUNC). This can be compared to when Ethereum forked from the main chain in 2016, while the original became known as Ethereum Classic. The only difference is, that both of those cryptocurrencies have held up decently well, unlike Terra.

On the other hand, LUNC has not done so hot, hovering at 0.00011, which is around the same price at the massive drop a few weeks ago. Former stablecoin UST, now known as USTC, is trading around $0.02, 98 cents below its desired value.

It was revealed last week that Do Kwon and Terraform Labs wiped out $60 billion dollars in market value, the same amount as Bernie Madoff.

Terra DeFi app Mirror Protocol exploited

If matters couldn't get worse for Do Kwon, a DeFi app called Mirror Protocol built on Terra, has suffered an exploit. The native governance token, MIR, has dropped over 13% this week to $0.29.

Fatman, a pseudonymous researcher covering the Terra debacle, stated on Monday that an attacker had already drained $2 million from the embattled protocol. The devs don't seem to be too interested.

Mirror Protocol is being exploited again as we speak, and the devs are completely MIA. So far, the attacker has drained over $2m and counting - the attack will get worse when markets open tomorrow unless the dev team steps in and fixes the price oracle. @mirror_protocol (1/4)

— FatMan (@FatManTerra) May 30, 2022

The whole point of the protocol is to "mirror" traditional stocks as tradable digital tokens. Naturally, these tokens have no actual relation to the stock itself, meaning you can't exchange them for the real thing. These tokens merely track the prices of the underlying stock, giving crypto traders access to their price fluctuations.

The future for Do Kwon and Mirror Protocol

In addition to these new woes, Mirror Protocol is one of the highest targets under SEC scrutiny. In fact, Do Kwon was ordered to comply with a US subpoena in February involving Mirror. Kwon, of course sued the SEC, claiming that they violated the due process clause of the US Constitution.

As I covered last week, Do Kwon has a decent chance of serving prison time in South Korea. The authorities have already charged him with a $78 million fine for tax evasion.