The value of the TerraUSD-linked digital currency Luna plummeted to almost zero Thursday. After the TerraUSD stablecoin lost its peg to the U.S. Dollar, Luna was dragged down, sparking a massive selloff.

TerraUSD, which is supposed to be pegged to the U.S. dollar, fell below the $1 mark earlier in the week. The digital currency is automatically pegged to the U.S. dollar via a complex burn and mint system that uses Luna. Tokens are created and destroyed to maintain the one-to-one ratio.

So-called stablecoins are typically backed by real-world assets such as bonds, but Luna is only backed by a bitcoin reserve maintained by the Luna Foundation Guard. The organization, established by Terra founder Do Kwon, reportedly has around $3.5 billion worth of bitcoins in reserve.

After the TerraUSD lost its peg to the U.S. Dollar, investors were spooked and dumped millions of Luna tokens. Last week, Luna was worth around $85 per coin. By Thursday, Luna took a nosedive to around 4 cents per coin, making it almost worthless.

In response to the dip, some exchanges suspended trading of Luna tokens. Binance, one of the world's largest cryptocurrency exchanges, announced that it could no longer support transactions using digital currency as the Terra network was experiencing massive congestion. The exchange said the blockchain used to trade Luna tokens was experiencing extremely high volumes, namely massive amounts of withdrawal transactions. As of late Thursday, Binance had resumed withdrawals of Luna tokens.

Luna and UST tokens are still accessible to trade on FTX and other smaller exchanges, despite a second suspension of the Terra blockchain. Luna is also still trading on, a China-focused platform. FTX had over $445 million in volume between its USD and USDT trading pairings in the last 24 hours.

Meanwhile, estimates that Luna has received $84 million in volume in the previous 24 hours. Bitazza, a Thailand-based exchange, was trading both Luna and UST until early Thursday before it was suspended.

The TerraUSD issue has spread throughout the cryptocurrency world, particularly because the Luna Foundation Guard is holding massive amounts of bitcoin in reserve. The danger now is that the organization may be forced to liquidate its bitcoin assets in order to maintain the peg.

Bitcoin has plummeted more than 29% in the previous seven days, dropping below $26,000 at one point on Thursday to trade at its lowest level since late December 2020. Tether also fell below its $1 peg Thursday amid the global cryptocurrency drop.