The Hybris Algorithmic Stability and Fraud and the Terra Collapse. A Script Analysis

• In Event: White-Collar and Corporate Crime in a Modern World - Covid, Live Streaming and Cryptocurrency

Abstract

The paper provides the script analysis of the operation and the collapse of the cryptocurrencies Terra/Luna. What makes the collapse a worthy case to study is that it goes beyond "simple" cryptofrauds in many respects, including a unique algorithmic formula that goes to the heart of the sustainability of stablecoins and crypto markets in general; the viability of algorithmic solutions to overcome fundamental market problems; as well as the involvement of high-profile academics and investors in the project from its inception.
The paper analyses the setup of the Terra/Luna ecosystem, its algorithmic foundations, as well as the events leading up to its collapse. The analysis concludes with a discussion of the policy and regulatory implications of the Terra/Luna collapse.

Author

• Csaba Györy, ELTE University Faculty of Law, Budapest / Institute of Legal Studies, Centre for Social Sciences, Hungarian Academy of Sciences