A year ago this week, the TerraUSD stablecoin lost its peg to the dollar and kept sliding, ultimately meeting its demise in a death spiral that no amount of effort — or tweeting — by its co-founder Do Kwon could halt, Bloomberg News reported. As fate would have it, Kwon marked the anniversary of the $40 billion crypto disaster by appearing in court in Montenegro to plead not guilty to passport violations. That’s the least of his worries: He also faces charges from prosecutors in South Korea and the U.S., who are accusing him of a years-long fraud. The collapse of TerraUSD, which originally was backed by nothing but another Terra-created token and a surplus of hopium, was the first domino in a chain reaction that eventually toppled several prominent crypto startups, including exchange FTX and lender Genesis Global. The contagion reshaped the entire industry, yet it also highlighted a serious issue that has gone unmitigated in the ensuing year: counterparty risk. It’s ironic, because this particular risk – the danger to your investments posed by those you’re dealing with – was one of the flaws of conventional finance that Bitcoin was meant to fix.
