July 5, 2022

How a Trash-Talking Crypto Founder Caused a $40 Billion Crash

Neel Somani, 24, quit his job as a quantitative researcher at Citadel, a hedge fund, in February to work on a project that connected Luna’s underlying blockchain to Ethereum, another crypto system.

In April, Mr. Somani joined Terra Hacker House, a monthlong program in a Chicago office sponsored by Terraform Labs and its investors, designed to incubate projects built on Mr. Kwon’s technology. Within a few weeks, Mr. Somani lined up $10 million in commitments for venture funding that valued his project, Terranova, at $65 million. He was close to hiring three employees, he said, and had 40 customers excited about the idea.

After Luna and TerraUSD tumbled, Mr. Somani and his fellow hackers initially thought Mr. Kwon and his partners could turn things around. But by last Tuesday, Mr. Somani realized it was over, and felt relieved he hadn’t yet accepted the funding. He lost around $20,000 of Luna, he said, which didn’t bother him since he has made money on other risky stock and crypto bets.

Over the last week, the desks at the hacker house have emptied. A Telegram group called Rebuilding Terra, with nearly 200 members, has been actively discussing how to salvage projects and funds.

Mr. Somani is sanguine. “For those of us who are crypto builders, the feast and famine mentality comes really naturally, and that’s maybe what attracted us to the community,” he said.

On Thursday, he plans to pitch his now-obsolete technology at the hacker house’s demo day. Most other groups have left the program, he said, so he expects less competition for a $50,000 first-place prize.

“It’s in U.S. dollars,” he said. “I asked.”

Kirsten Noyes contributed research.

Audio produced by Parin Behrooz.

Article source: https://www.nytimes.com/2022/05/18/technology/terra-luna-cryptocurrency-do-kwon.html

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