Some crypto investors say TerraUSD and Luna's $60 billion crash pushed them to the brink and led to thoughts of self-harm
- Four nonprofessional investors told Insider TerraUSD's crash in May made them think of self-harm.
- It's unclear how many investors were impacted, but the crash wiped out around $60 billion.
Yuri Popovich thought about harming himself when he saw his life savings evaporating over three weeks in May.
His life savings of about $10,500 was stored in the form of a
But in early May, the token started to unravel. By the end of the month, it was hovering at about $0.01. Popovich's life savings dwindled to about $106 as of Friday, based on Insider's calculations.
Within a few days of the crash, Popovich, 32, started feeling desperate. Popovich said he did not dare to tell his wife because she contributed to his savings. He was sleeping only two or four hours a night, and thought about harming himself.
"I felt like I was in a vacuum… I did not see the future because the loss was too great for me," he said.
Popovich said his anxiety has since waned, but he was surprised by his suicidal thoughts. After all, he had been dealing with great uncertainty and stress over the past eight years. In 2014, Popovich said he lost his apartment in Donetsk after Kremlin-backed separatists overtook the city in eastern Ukraine. He then lost his job, and in February, Russia invaded Ukraine.
"Considering all the hardships, including the loss of everything in 2014 during the war in Donetsk, then the war that is now going on, the situation with TerraUSD unsettled me the most," Popovich said.
Popovich wasn't the only TerraUSD investor who felt defeated by the token's crash.
In interviews with Insider, nonprofessional investors told similar stories of how they were drawn to TerraUSD's promise of preserving monetary value. They also shared how, upon learning that the coin's value had plunged to almost nothing, they fell into despair and thought about harming themselves.
TerraUSD and Luna's crash wiped out a market that once peaked at $60 billion
Most stablecoins are backed by real-world assets, but TerraUSD used an algorithm to determine its value. Through a see-saw relationship, a sister token called Luna kept TerraUSD's price in check. Whenever TerraUSD's price fell, investors could buy the coin to convert it into Luna. The purchase would shrink TerraUSD's supply and push its value back to $1. If TerraUSD rose above its pegged value, a reverse process would bring its price down. Some critics pointed out a fatal flaw in the system: if investors lost confidence in TerraUSD's ability to maintain the peg, the two tokens could come crashing down, per Bloomberg.
On May 7, TerraUSD lost its peg. Anxious investors rushed to dump their TerraUSD holdings and the token cratered, bringing Luna down with it. By late May, the tokens were almost worthless. Their crash wiped out a combined market value that was once $60 billion at its peak. On May 25, TerraUSD's creators decided to switch off the network that issued the token, effectively killing TerraUSD off in the process.
Experts are still trying to determine what caused TerraUSD's depegging, but the damage was done. Popovich's life savings evaporated during this time. He said that his losses amounted to about two to three years' worth of salary.
In China, Wan Yu has been battling a malignant tumor that spread from his stomach to his liver for the past two years, he told Insider last week. He said he recently had to cut down on his working hours to undergo several rounds of treatments.
Wan, who lives in the southwestern city of Chengdu, said he needed to find a stable source of income for future medical treatments. So when he read an article on Binance about TerraUSD, he decided to invest $90,000 into the token, he said.
Wan said the next time he checked his account in late May, TerraUSD's value had plunged to about $0.03. "I instantly felt like my soul dissociated from my body," he told Insider in Mandarin.
Wan said he thought about killing himself because the shame and stress were too much to bear. Wan said he feels better now, but he still hasn't told his wife or anyone else about the loss.
"You're the first to know," he told Insider.
In Tehran, Iran's capital, Farzam Fallah told Insider a similar story. The 32-year-old salesperson said US sanctions on his country meant that it was hard for him to invest in foreign assets. He turned to TerraUSD, because crypto exchange OKX offered high returns for depositing the token with them. Moreover, converting his money into TerraUSD meant that he effectively could trade with US dollars.
In January, Farzam said he converted his life savings of about $13,000 into the token. A large part of that sum was actually inherited from his father after he passed away, Farzam said. After the token's meltdown, Farzam said he felt like harming himself. "I had nothing to lose anymore. $13,000 was all I had in my life, all my life savings," he said.
Similarly, German expatriate Christian, who lives in Thailand, told Insider he put about $71,000 into TerraUSD earlier this year, hoping to make some money from the higher yields. He said he became "suicidal and completely depressed" after losing almost all of it. Christian, 39, did not want to reveal his full name so as to protect his identity.
It's unclear how many amateur investors suffered in the crash. Suicide-prevention and counseling organizations in the US, Singapore, and the UK were unable to tell Insider how many calls they received in May were related to the crash.
However, the organizations all noted that huge financial stresses can worsen mental health. "The causes of mental health issues, including suicidal thoughts, are complex and determined by many different factors or a combination of factors. Certainly suffering huge financial loss can be one of those factors. It's important for people to remember that help is available," Dani Bennett, a Substance Abuse and Mental Health Services Administration (SAMHSA) spokesperson, told Insider. SAMHSA provides support for the US National Suicide Prevention Lifeline.
The crash prompted a Reddit user to share on May 12 a list of suicide-prevention helplines around the world so that those who were "panicking" could call for help. "Here, I like to emphasize again, don't invest money you need to survive/live the next weeks/months/even a year. Don't invest in the hopes of having more next month," the post read.
Investors and experts are still trying to find out what led to the crash
Investors and experts are still trying to uncover what factors led to the crash. However, they're unlikely to find answers from regulators as of now. The cryptocurrency ecosystem was built on the principle of decentralization, and so it remains relatively unregulated. Crypto firms have actively resisted any form of policing.
"The onus then falls on investors to do their due diligence. A better solution would be to impart the basic universal skills that allow a retail investor to manage the risks," Spencer Li, managing director at Synapse Trading in Singapore, told Insider.
This lack of policing may be changing in the US, however. On Tuesday, senators Kirsten Gillibrand and Cynthia Lummis introduced a bipartisan bill that would give the Commodity Futures Trading Commission authority to regulate cryptocurrencies.
"As a former regulator, there is a lot of work going on in this space that will impact consumer/investor protection, financial stability, and the broader economy. These digital assets should flourish and see wider adoption with the right regulations in place," David Cass, who was involved in supervising cyber and IT risks at the Federal Reserve Bank of New York, told Insider. He is now managing director at crypto trading firm GSR.
Some retail investors are claiming trading platforms took part in predatory marketing or unsavory practices that resulted in their losses. Popovich and Wan told Insider they were lured by Binance's offer that allowed anyone who deposited UST with them with yields of almost 20%. "It's the largest exchange, so I thought I could trust whatever it said," said Wan.
Another platform, Stablegains, invested users' deposits into TerraUSD without their knowledge, Insider reported on Thursday. Some 4,500 customers lost a total of $40 million after the meltdown.
Retail investors are trying to find ways to reclaim their losses. All four who spoke to Insider said they were prepared to take legal action if necessary. "I hope to get some money back with the class action even if it takes a few years. There is still a tiny chance of compensation for UST holders," Christian said.
For now, investors are finding strength and courage from the kindness of others to help them move on from the episode. After The Guardian and Insider first reported about Popovich's predicament two weeks ago, Popovich said strangers started reaching out to him with donations.
"The first time I truly managed to sleep was a few days ago when they started donating to me. I then realized that there is a chance to get out," he said. With newfound hope, Popovich said he found the courage to tell his wife about the loss.
"I promised that everything will be fine, and I will fight to the end for compensation," he said. "We love each other, so she believed and supported me. I am ready for a lot of justice."
If you or someone you know is struggling with depression or has had thoughts of harming themselves or taking their own life, get help. The National Suicide Prevention Lifeline (1-800-273-8255) provides 24/7, free, confidential support for people in distress, as well as best practices for professionals and resources to aid in prevention and crisis situations.
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