As Terra Luna’s death spiral accelerated, his followers, known as “Lunatics”, teetered between terror and hope as Mr. Kwon injected over $1 billion worth of Bitcoin into the system in an attempt to restore stability. “Deploying more capital: stable boys”, he tweeted.
But ultimately not enough cash came in to offset the outflow, as in an ordinary bank run, and this particular experiment of replacing trust with math came to an end. Among the many thousands of failed crypto experiments, Terra Luna stands out as one of the largest, with a total market value of approximately $60 billion.
The vociferous opponents of cryptocurrencies have been quick to celebrate the death of the blockchain, insisting that all cryptocurrencies are fraudulent. These critics are a mirror image of the equally unrealistic cheerleaders at the opposite end of the spectrum: pro-crypto libertarians who call for a financial world without regulations of any kind.
Responsible players in the crypto market have been calling for and helping to develop sensible regulatory frameworks for many years. There is already a foundation of crypto regulations; in the United States, federal agencies such as the Financial Crimes Enforcement Network, the Securities and Exchange Commission, and the Commodity Futures Trading Commission began weighing separate aspects of trading and taxation in 2013. In October, the Department of Justice announced the formation of the National Cryptocurrency Compliance Team. The list of crypto fraudsters who have gone to jail already far exceeds the number of bankers jailed in the United States for their role in the 2008 financial crisis.
In the early days of the Internet, the circus atmosphere made it easy to ignore the dangers that were brewing—surveillance capitalism and illegal government espionage among them—and that would have dire global consequences. Over time, regulations were put in place: privacy frameworks, such as some provisions of the Gramm-Leach-Bliley Act of 1999 in the United States and the General Data Protection Regulation of 2016 in Europe, and speech protections such as Section 230. of the Communications Decency Act.
At the same time, the wonders of the Internet multiplied, magic that already seems insignificant: a map of the world, street by street, in your pocket; instant translations from almost any language; a consultation service for each branch of knowledge; global news, almost instantaneous. Today’s Internet is deeply intertwined with the world’s economies, media, politics, industry, and social life, in good ways and in bad..