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

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 ...