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A $60 Billion Crypto Collapse Reveals a New Kind of Bank Run

Terra’s coins were supposed to be the future of money. But they relied on confidence—which can vanish in an instant.

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Illustration: Maria Chimishkyan for Bloomberg Businessweek

Last fall, on the advice of a friend, Odosa Iyamuosa invested his life savings of $4,000 in a cryptocurrency called Luna. The 28-year-old, who lives in Abuja, Nigeria, researched the coin himself online, and what he found seemed promising. Luna’s price was soaring, thanks to the success of another coin with which it was deeply intertwined, TerraUSD. Some of the crypto industry’s biggest names had already invested, including Galaxy Digital Holdings Ltd., the high-frequency-trading firm Jump Trading, and venture investment arms of the exchanges Coinbase Global Inc. and Binance.

For Iyamuosa, it seemed like his best hope to get out of Abuja, where he says many jobs pay just $2 a day, or less. He’d scraped together a little money selling knockoff Nike and Adidas sneakers to local buyers he found on Instagram. He wanted to increase his savings to $16,000 and enroll in a data-analytics program at a college in Toronto so he could get a job at a big American company, like Netflix or Google. And for a few months, it looked like his plan was working. The value of his Luna coins doubled. “I sent money to my mom and my siblings,” he says. “I was able to eat properly.”