Crypto Crash Continues as TerraUSD Stablecoin Blockchain Fails and Luna Token Drops to Zero

JThe price of many cryptocurrencies continues to fall, largely due to widespread concern about the Federal Reserve’s inflation-fighting actions and how bond sales (and higher interest rates) will affect investment markets.

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On May 12, TerraUSD, one of the stablecoins previously pegged to the dollar, stopped processing new transactions. Similarly, the affiliated token Luna also halted trading and its value dropped to zero, according to Bloomberg.

On the first weekend of May, TerraUSD broke its peg against the US dollar, and on May 11 fell to 23 cents. It regained ground to trade at 58 cents, CNN reported, but not before another crypto sell-off sent bitcoin down about 50% from its all-time high. On the morning of May 13, TerraUSD fell back below 20 cents again, and the Luna token dropped to zero from a high of $119.51.

In a May 12 tweet from developer Terra, now republished and pinned by Terra’s verified Twitter account, @terra_money, the developer wrote: “The Terra blockchain has officially stopped at block 7607789. Terra validators have taken the network down in the future. backup with a plan to restore it. There will be more updates. The post was retweeted 8,608 times, received 9,304 comments and 29,300 likes, indicating a lot of interest in the currency.

On May 13, @terra_money tweeted an update stating: “Terra blockchain has resumed block production.”

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Another bright spot: Bitcoin rose slightly on Friday morning, climbing 8.4%. However, at $30,775, it remains well below its all-time high of $68,990, according to CoinDesk.

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Volatility in the cryptocurrency market has attracted the attention of economists and investors. Bloomberg reported that Treasury Secretary Janet Yellen told the Senate earlier this week that “the stablecoin known as TerraUSD experienced a drop and lost value. I think it just illustrates that this is a fast growing product and there are financial stability risks.

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This article originally appeared on Crypto Crash Continues as TerraUSD Stablecoin Blockchain Fails and Luna Token Drops to Zero

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