Report Shows Terra Whales Dumped UST as Soon as It Started Crashing

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In Brief
  • A new report from Jump Crypto as revealed the role played by whales in the UST de-peg.

  • The report said that retail investors with less than 10k in UST increased their exposure to the asset despite the de-peg.

  • It also claims that the seven wallets mentioned by Nansen were part of a larger trend.

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Jump Crypto has released a report on the crash of TerraUSD (UST), revealing that while whales were exiting their positions in the algorithmic stablecoin, retail investors kept buying.

Jump Crypto, the cryptocurrency arm of Jump Capital, is one of the major backers of the collapsed Terra blockchain. The report is its first public statement since the collapse of the blockchain.

The firm revealed that its report is based on available blockchain transactions, which shows that several large investors with over $1 million UST liquidated their holdings very early into the depeg leaving retail investors with worthless tokens.

Interestingly, retail investors with less than 10k in UST increased their exposure between May 6 to May 9. But large depositors reduced their UST position in Terra’s Anchor protocol by almost 15% on May 6, when UST first lost its peg.

However, the increased exposure from small investors was not enough to counteract the outflow as “their total position size was an order-of-magnitude smaller than that of mid-sized and large depositors,” the report said.

Seven wallets claim was ‘part of a broader trend’

The report also acknowledged the earlier report by blockchain analytics platform Nansen. Nansen claimed that the collapse of the Terra blockchain is traceable to seven wallets, including one associated with crypto lender Celsius.

According to Jump Crypto, the seven wallets highlighted by Nansen were “part of a much broader trend” that drove the outflows in Anchor in the beginning of the UST de-peg.

One particular wallet was critical to the collapse after reducing its UST position by around $85 million on May 7. Many believe that the wallet triggered the chain of events that eventually led to the collapse of the network. 

There has been speculation about who is behind the wallet, with many saying it belongs to a crypto trading firm. But the report said it is unlikely the wallet is associated with a trading entity judging by its history.

The report does not speak about the role of the Luna Foundation Guard (LFG) in the collapse. Jump Trading President, Kanav Kariya, is part of the governing council of the foundation. LFG had tried to stabilize the peg of UST by selling its bitcoin reserve, but the effort was too late to save the ecosystem.

The collapse of Terra blockchain last month wiped off around $40 billion from the industry and was further exacerbated by the wider crypto market sell-off. Regulators around the world have since increased their scrutiny of Terraform and the crypto industry at large.

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Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.

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