Attacker made $800 million by attacking UST stablcoin

Since the beginning of the week, the Terra UST stabelcoin has experienced a serious collapse, losing its peg to the U.S. dollar. In addition, Terra LUNA’s own cryptocurrency has corrected by more than 80% over the past four days.

In light of this, rumors of a coordinated attack on the UST stabelcoin have begun to circulate. Specifically, it is believed that one attacker sold $285 million worth of UST Stablecoin on Curve and Binance.

Through this coordinated attack, the attacker could have earned more than $800 million. A popular network analyst nicknamed Onchain Wizard posted on Twitter explained how the fraudster could have used the LUNA-UST-BTC ecosystem.

We don’t know when the attacker took 100,000 BTC to open a position, except that they were sold to Kwon (speculation). LFG bought 15,000 BTC between March 27 and April 11, so let’s just take the average price between those dates ($42,000).

As a result, by April 11, the attacker had opened $4.2 billion in bitcoin short positions. At the same time, he created $1 billion in over-the-counter (OTC) positions in UST. This set the stage for UST liquidation and simultaneously bitcoin shorts, knowing that LFG would sell his bitcoins to protect the UST peg.

Initially LFG removes $150 million of liquidity, meanwhile the attacker uses $350 million worth of UST to deplete Curve’s liquidity. From this point on, the UST peg is canceled and the rate drops to $0.97.

Later, Luna Foundation Guard (LFG) also begins selling its bitcoins from reserves to protect the peg. This puts downward pressure on the bitcoin price. When Curve’s liquidity was depleted, the attacker would begin unloading the remaining $650 million of UST’s OTC position from a total of $1 billion on Binance.

So, LFG sells BTC to rebuild the peg, while the attacker sells UST on Binance. Eventually, the network overloads and CEX suspends UST withdrawals, causing a bank runaway panic. UST drops to 60 cents, while BTC bleeds out,” Onchain Wizard explained.

When strong USTs are liquidated, the LUNA price begins to fall because of Terra’s algorithmic mechanism. Over the past month, the price of bitcoin has fallen from $42,000 to $30,000.

Thus, if the attacker could close his short positions of 100 thousand BTC at $32 thousand, he would earn over $950 million. Of course, the attacker would incur some losses on the UST dump, but they would be very insignificant.

I don’t think they took a big loss on the $350 million UST dumps, probably 3% or only $11 million. And let’s assume that all the Binance dumps were done at 80 cents, that’s another $125 million cost. And the total profit is $815 million (relative to the cost of the loan),” added Onchain Wizard.

The analyst also explained that any shortfall in LUNA would have brought the attacker additional profits.

How to make more than $800 million in cryptocurrency by attacking the once third-largest Stablecoin, Soros-style.

Everyone is talking about the attack on UST now, including Janet Yellen. But no one is talking about how much money the attacker made (or how he pulled it off). Let’s get to the bottom of this🧵