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Explainer: Crypto crash — why it's difficult for burned Luna, TerraUSD investors to seek financial recourse

Explainer: Crypto crash — why it's difficult for burned Luna, TerraUSD investors to seek financial recourse

SINGAPORE — Many young investors here lost significant chunks of their life savings in a span of days when a popular cryptocurrency went into meltdown. They were left wondering if they could recover the money, or if the authorities could help.

Some were left puzzled at the description of TerraUSD, better known as UST and its affiliated cryptocurrency Luna, as a "stablecoin", which gave them the impression it was perhaps safer than other cryptocurrencies.

This all happened after TerraUSD broke its 1:1 peg to the United States dollar and crashed in value. While "stablecoins" have no real legal status, they are linked to the value of assets such as the US dollar.

Luna, once ranked among the top 10 most valuable cryptocurrencies, has since plunged to virtually zero from an all-time high of US$119.18 set on April 5 this year.

So, do investors have no means of recourse?

TODAY spoke to lawyers to find out if there is anything that can be done, what distinguishes promotions and marketing tactics from scams and whether the authorities can do anything to help investors who have lost money.

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