At a Glance
- A study from Queen Mary University of London uncovered the mechanisms behind the TerraUSD and LUNA collapse, revealing that coordinated actions led to a $3.5 billion value loss.
- The researchers used temporal multilayer graph analysis to map relationships between cryptocurrencies on the Ethereum blockchain, tracking how large trades destabilized TerraUSD in May 2022.
- Dr. Richard Clegg’s analysis showed that a small group of traders controlled most of the market leading up to the collapse, with unnatural trading patterns suggesting deliberate efforts to destabilize the system.
- The study reveals that the TerraUSD collapse was not just a market event but a result of coordinated actions, challenging the assumption that it was a natural consequence of market fluctuations.
- The team’s software offers regulators and investors a powerful tool for identifying risky behaviors in cryptocurrency markets, aiming to improve oversight and transparency in the industry.
A new study published in ACM Transactions on the Web by Dr. Richard Clegg and fellow researchers at Queen Mary University of London has uncovered the mechanisms behind one of the biggest collapses in the cryptocurrency world—the failure of the TerraUSD stablecoin and its associated currency, LUNA. Dr. Clegg’s research used advanced mathematical techniques and software to identify suspicious trading patterns that suggest a coordinated attack, which led to a massive $3.5 billion loss in value.
The team employed a method known as temporal multilayer graph analysis to map out the relationships between different cryptocurrencies traded on the Ethereum blockchain. This technique allowed the researchers to track the system’s evolution and discover how a series of large trades destabilized TerraUSD, a stablecoin designed to maintain a steady value. In May 2022, TerraUSD and LUNA collapsed, but the study revealed that the crisis was not just an unfortunate market event—deliberate actions from a few traders triggered it.
According to Dr. Clegg, the analysis showed that a small group of traders controlled most of the market during the days leading up to the collapse. This level of coordination is highly unusual in normal trading conditions, suggesting that these traders were working together to destabilize the system. “What we found was extraordinary,” said Dr. Clegg. “On key dates, we observed highly unnatural trading patterns, with only a few individuals controlling nearly the entire market.”
The study sheds light on the TerraUSD collapse and introduces a powerful new tool for analyzing cryptocurrency markets. The software developed by the team could help regulators, investors, and researchers identify risky trading behaviors and protect against similar events in the future. Dr. Clegg emphasized the importance of using rigorous mathematical techniques to understand cryptocurrency markets better and improve transparency in an industry often criticized for its lack of oversight.
References
- Mary, Q. & University of London. (2025, April 4). Mathematicians uncover the hidden patterns behind a $3.5 billion cryptocurrency collapse. Phys.Org; University of London. https://phys.org/news/2025-04-mathematicians-uncover-hidden-patterns-billion.html
- Ba, C. T., Steer, B., Zignani, M., & Clegg, R. (2025). Investigating the luna-terra collapse through the temporal multilayer graph structure of the ethereum stablecoin ecosystem. ACM Transactions on the Web, 3726869. https://doi.org/10.1145/3726869
