Industry Updates

21Shares, Valour and VanEck suspend terra ETPs

Luna hit $0 on Friday

Theo Andrew

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VanEck and 21Shares have suspended creations and redemptions on their terra exchange-traded products (ETPs) while Valour has halted trading completely after the token price plummeted to $0 earlier this week.

The 21Shares Terra ETP (LUNA) and the VanEck Terra ETN (VLNA) are currently unable to provide creation and redemption operations while the luna network operates “intermittently and inconsistently”.

The Valour Terra (LUNA) ETP – listed on the Nordic Growth Market – has halted trading completely “due to the high volatility and the prevailing uncertainty around the terra ecosystem”.

It comes as the price of luna finally hit $0 on 13 May after a torrid week which saw the TerraUSD (UST) stable coin depeg from the US dollar.

Following the suspensions, the ETFs have seen wild price swings from their NAV.

21Shares’ LUNA, which trades on the SIX Swiss Exchange, Euronext and Xetra, is 98.8% down over one day and is currently trading at a 15.8% discount to NAV, according to Bloomberg.

VLNA, which trades on Deutsche Boerse, is currently trading at a 218.4% premium.

In a statement to ETF Stream, Hany Rashwan, co-founder and CEO of 21Shares, said: “Because the LUNA network is operating intermittently and inconsistently, 21Shares is unable to provide creation and redemption operations and is suspending the quotation of the terra ETP. We will continue to closely monitor this fast-evolving situation on the underlying.”

In a market statement on LUNA, SIX Swiss said: “Due to the current instability of the terra blockchain and the resulting severe price developments and illiquidity of LUNA, the underlying of the affected products, as well as the inability of the market makers to quote bid-offer spreads for the affected products, the issuer has decided to temporarily suspend trading in the affected products.”

In a statement to shareholders, Valour said: “Due to the high volatility and the prevailing uncertainty around the Terra ecosystem, the NGM exchange, has halted trading in Valour Terra (LUNA) ETP.

“It is Valour's intention to provide a market, through the market maker, as soon as possible and allowed. We keep a continuous dialogue with the exchange.”

Earlier in the week, BlackRock and hedge fund giant Citadel Securities were forced to deny making the trade that led to the depegging.

UST is a decentralised stablecoin that mints and burns tokens to stabilise the price in line with the US dollar in a bid to avoid the volatility associated with cryptocurrencies.

Terra was co-founded in 2018 by Daniel Shin, one of the founders of South Korean eCommerce platform TicketMonster, and Do Kwon, a former Microsoft and Apple software engineer. The coin also offers financial tools applications and NFT solutions.

After the coin depegged, Kwon made a last-ditch attempt to restore UST to its alignment with the US dollar by increasing the rate of luna minted per day in a bid to boost the price.

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