Before it collapsed, algorithmic stablecoin TerraUSD was billed as a safe way to invest in crypto.
This is an as-told-to interview with “Raiden,” a 23-year-old recent university graduate whose identity is known to Insider, and who said he lost his life savings in the TerraUSD collapse. He describes the devastating impact of losing his money in what many have called a “Lehman moment” for crypto. He spoke with Insider reporters Morgan Chittum and Lisa Kailai Han about his experience. Han translated the interview from Mandarin to English.
CHONGQING, CHINA — A few weeks before my college graduation, I lost my life savings from my crypto investments. Now, I’m living paycheck to paycheck.
In May, I put in roughly $20,000 in algorithmic stablecoin TerraUSD, and it all quickly vanished. I decided to invest in TerraUSD because, well, I thought it would be stable. After all, it’s in the name. I saw the price was declining and I thought I could buy in on its dip.
The project’s founder, Do Kwon, tweeted that he had plans to revive the project and I believed him at the time. The stablecoin’s ecosystem later collapsed and all the money, which I had originally made as a Taobao merchant throughout college, was gone.
Three years ago, I first got into crypto because on social media I saw that everyday people were making large returns on their investments in Bitcoin and Ethereum. I would spend around 4-5 hours a day tracking and researching my trades. At one point, I made $10,000 from various investments in Bitcoin, Ethereum, and a few altcoins like Polkadot and Kyber Network. I also lost money, but none of it compared to the financial impact of my LunaUSD investment.
Once market conditions became more volatile this year, I allocated more to what I thought would be a safer asset, an algorithmic stablecoin.
I never dreamed this would happen to me or my portfolio, but I treat it as a learning experience. Thankfully, my parents have helped me financially and have been supportive during this time as well, as have my friends.
However, I think that the TerraUSD collapse could have been prevented if there were more regulation in crypto. Further regulatory oversight could protect investors from sketchy projects and also hold its creators accountable. The Luna and Terra crash ruined a lot of people financially and forced them into bankruptcy.
Given both volatile market conditions and the regulatory environment in crypto, I’m not actively investing right now. In the future, however, I’m going to keep my portfolio small with a handful of tokens like Bitcoin, Ethereum, and maybe a few alts. I’ll allocate to less speculative assets in bearish markets.
As someone who has lost a lot of money in crypto, I recommend doing more research before investing and vetting projects thoroughly. Also, don’t invest what you can’t afford to lose and don’t invest all your money at once.
I was gullible, believed a single source, and had too much exposure to one asset. As a result, I lost my entire life savings.
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