$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

https://www.cnbc.com/2022/05/16/what-happened-to-the-bitcoin-reserve-behind-terras-ust-stablecoin.html

by SirLJ • 4 years ago

420 520 4 years ago

latchkey3• 4 years ago

I'm kind of amazed that the Bitcoin price wasn't affected more given this event as well as the larger macro events with the stock markets, Fed and inflation.

throwaway1777• 4 years ago

A lot of speculation that not all of this btc was actually sold. Sure it was transferred to an exchange but know one really knows what happened after that.

zekrioca• 4 years ago

In the above sentence, I think the first "know" should really be "no" :)

ChrisClark5• 4 years ago

Yeah, the previous crashes have been a lot more violent. The current bubble is definitely over though. Bubbles come like clockwork every 4 years (due to the 50% supply cuts every 4 years) it would be interesting to see if it happens again.

Though an earlier bubble could be kicked off when ethereum cuts it's supply by 90%.

datalopers2• 4 years ago

The current bubble is definitely over though

Why do you say “over”? I see BTC reaching $20k this summer and then falling to <$10k as miners fold.

fsckboy• 4 years ago

The current bubble is definitely over though

with bitcoin hovering ~$30K, still seems like there's air in the bubble. a 50% drop (from $60K) is pretty normal for bitcoin. It could drop a lot more without shaking the confidence of the hodlers

ptudan2• 4 years ago

Unweathered protocols on eth failing shouldn't affect bitcoin. They're only related insofar as they are both crypto. The $3B in bitcoin sold could have been anything.

carnitine• 4 years ago

A 3bn fire sale is going to have a price effect no matter the reasoning behind it.

firloop• 4 years ago

Minor nit but Terra isn't a protocol on Ethereum, Terra is its own L1 that competes directly with Ethereum.

idkyall• 4 years ago

Well, the value that collapsed was the exchange rate of BTC to LUNA, which is now at fractional cents per coin after hyperinflation... They kind of gave a $3B liquidity exit for holders to dump their LUNA tokens into via the LUNA/BTC pairs that they were market making

paulpauper2• 4 years ago

it dropped 20% over the past week and keeps falling now.

fullstop• 4 years ago

Netflix has dropped 45% over the last month, Amazon 27%, TSLA 27%, Disney 17%, BTCUSD 26%.

I'm definitely not sold on Bitcoin, but it tracks along with tech stocks for some reason.

_fat_santa• 4 years ago

As of writing, CoinMarketCap values TerraUST (the stablecoin) at $0.09. Needless to say, that 3B didn't do a damn thing. No amount of cash infusions are going to save Terra, because the problem is trust.

bushbaba• 4 years ago

Or the problem is a bank run. They threw 3B to fix an issue with a bank having 40B+ in assets and seeing more than 3B of withdraws.

NovemberWhiskey16• 4 years ago

A bank run is exactly a trust issue.

koolba• 4 years ago

Needless to say, that 3B didn't do a damn thing.

If it propped it up long enough for insiders to dump their positions it did it’s served it’s purpose.

joosters• 4 years ago

"Sold"

It's hard to show that they really sold these coins. Certainly, the LFG transferred the coins to some different exchanges. But did they truly sell them?

If I was running a dodgy ponzi scheme and saw it collapsing catastrophically, I don't think I'd be throwing good money after bad trying to futilely patch it up. Much better to stash the remaining assets away somewhere and personally cash out later on.

Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!

gjvc4• 4 years ago

Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!

Good observation. I may not be Warren Buffet, but it angers me greatly to see this kind of moronic chatter masquerading as informed opinion on finance or market dynamics.

vmception25• 4 years ago

Sure, it’s a commodity and trades like a commodity.

Anything that stops a supply from overwhelming demand results in an increase in price.

Commodities traders accept the seasonality of their assets, and arent perma-bulls, with the exception of metals traders. Bitcoin inherits a mixture of stock traders and metals traders sentiment, where perma-bulls mentality of “number go up forever” is present but less warranted.

There are obvious periodic supply and demand movements in bitcoin, just like there is in oil, natural gas, and other commodities.

lizknope• 4 years ago

I just assumed that 99% of the people saying "this is good for bitcoin" are using the phrase as a meme mocking bitcoin and cryptocurrency in general.

celdon252• 4 years ago

I would hope that there would be some kind of evidence that can corroborate this. A sudden movement of 3B is a lot to hide on a public ledger, exchanges or no. Someone will certainly be connecting the dots.

exdsq• 4 years ago

I saw a twitter thread that this was a sell off to repay investment whales at a better rate than the real one - it was some big twitter guy in the space but I couldn't find it if I tried. If anyone knows the one I mean, please comment it here!

vmception25• 4 years ago

Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!

Yes all weekend I had been wondering and cautious based on how much bitcoin was left to sell! Its just a commodity, supply can be faster than demand, specifically when one whale is expected to flood the market

Terra Luna rallied 500x (50,000%) off the lows. Minting many millionaires that bought that dip. The rumors were that the recovery plan involved a bunch of the bitcoin collateral. I couldn’t verify that well.

Knowing its all gone (or the selling pressure is done, whether you believe it was sold or not) is very helpful

Terra Luna resumes its crash too

ordinaryradical• 4 years ago

Where is this rally you reference? All the charts I can find sink to zero with no significant movement after that point.

jandrese2• 4 years ago

Huh?

https://coinmarketcap.com/currencies/terra-luna/

javert• 4 years ago

There are lots of scenarios where the Luna becomes somewhat valuable again. A truly major crypto coin like Luna has never truly disappeared. Probably someone will make a fork like "Luna Classic." There are lots of these things (ETH classic, Bitcoin Cash, Bitcoin SV) that have zero rationale for existing, but are still traded with a high valuation.

tl;dr people will attempt to reflate their bags; some moderate success cannot be ruled out.

NovemberWhiskey16• 4 years ago

Terra Luna rallied 500x (50,000%) off the lows.

The patient is alive! There may no longer be a head attached to the body; but - look! - the little finger is twitching.

NelsonMinar2• 4 years ago

I'm sure we'll have an orderly audit and accounting for the loss of funds as adjudicated by the appropriate courts!

vmception25• 4 years ago

By 2032?

We need new songs, “you just got Do Kwon’d” instead of “Mt Goxxed”

eric_cc21• 4 years ago

'this is good for bitcoin'

A total ponzi scam coin crashed. This IS good for Bitcoin. Bitcoin is not Luna nor is it one of the thousands of other garbage scam coins. The faster those coins are proven scams the better.

Too many people falsely equate "Bitcoin === Crypto".. or "a fan of bitcoin is a fan of all crypto".

So I'd bounce this back to you: How is Luna's Ponzi crash NOT good for bitcoin?

shkkmo• 4 years ago

Too many people falsely equate "Bitcoin === Crypto".. or "a fan of bitcoin is a fan of all crypto".
So I'd bounce this back to you: How is Luna's Ponzi crash NOT good for bitcoin?

Doesn't the first line answer the second?

snovv_crash8• 4 years ago

Tell me, what assets exactly are backing BTC which stop it from crashing just like Luna?

loceng2• 4 years ago

What functionality was different between Bitcoin and Luna?

Is Luna not run off of Bitcoin?

So if Luna could function as a Ponzi scheme, why doesn't Bitcoin inherently have that same capability or function embedded into it? Or is there something preventing that from happening with Bitcoin?

Confused.

matheusmoreira12• 4 years ago

Too many people falsely equate "Bitcoin === Crypto".. or "a fan of bitcoin is a fan of all crypto".

It pretty much is. I can open the price graph for any coin and assume the bitcoin movements are similar. Small dip in bitcoin price? Alts get destroyed. Even ethereum gets destroyed.

tromp2• 4 years ago

Next you will be suggesting that Tether crashing will be good for bitcoin...

parkingrift• 4 years ago

If people react to the Luna ponzi by exiting crypto or not entering crypto, the price will continue to fall.

...hey, wait... that also sounds like a ponzi.

headsoup• 4 years ago

Don't look too far into what's backing Tether than, unless that burning is also 'good for Bitcoin.'

Lucky, that one has enough vested interest from those making money they'll do an awful lot to stop it following LUNA (inc if you look at the recent depeg)

SkipperCat2• 4 years ago

is the demise of Luna a sign that Bitcoin is a survivor or is Bitcoin just the last part of the Titanic still sticking out of the water. Time will tell but I am not bullish on cryptocurrency.

Anything can be a store of wealth. NFTs even had their day in the sun but it's hard to stay valuable unless you are providing actual value.

So I ask, where' the value in Bitcoin. It used to be a great way to launder money, not so much anymore. It was supposed to democratize finance and allow the individual to not get screwed over by the big banks, but with the amount of rug pulls in crypto, I feel safer at Wells Fargo (and I really hate Wells Fargo).

And don't get me started on DeFi. I'd be horrified by it if I just saw one Flash Loan attack but there's so many that I'd never trust my $$$ anywhere near that.

nullc• 4 years ago

I think it's a simpler explanation to assume that they would have robbed it by taking their huge stashes of luna and exploiting their 'buying'... it would hold up much better under scrutiny and they could still manage to transfer a significant fraction of the value into their pockets.

lamontcg7• 4 years ago

“In a sense, the market is going to take that as kind of bullish.”

I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets.

There's probably going to be a positive bounce just because markets don't move in straight lines.

There is always the chance that something else explodes due to stress tomorrow and hits the headlines and crypto and/or stocks start melting down again (nothing is ever a sure bet), but it feels like we're closer to hitting a point of selling exhaustion and an inflection point of negative sentiment.

foobiekr• 4 years ago

By what metric are things oversold? Valuations are still crazy by most perspectives, price/earnings, debt/revenue, etc. etc. etc.

Expect more losses.

lumost2• 4 years ago

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

devoutsalsa• 4 years ago

As I’ve been learning about value investing and growth stocks, it feels like we’re in a weird middle. Stocks aren’t cheap enough to attract the people who want to buy at a discount, and they’re not sexy enough to rally on the hype train. I don’t know what’s going to happen in the short term, and I wouldn’t really want to pretend that I do.

Enginerrrd• 4 years ago

I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets.

...Things have corrected SLIGHTLY from an absolutely historic bubble and you think it's OVER sold?

Meanwhile, we have significant inflation, rising interest rates, supply shocks that still haven't been sorted out and signs of economic slowdown.

Prices have been out of touch with reality for a long time. We aint anywhere near a bottom yet IMO.

300bps• 4 years ago

I mean everything is a bit oversold right now

Everythinig was way overbought when considering the money for those past purchases came from an accommodative Fed that flooded the economy with $9 trillion that currently sits on its balance sheet, lowered interest rates to literally 0 and the government sending out stimulus like it was candy.

All of which are either done or ending.

So I think a better way to phrase it is that the market is repricing with the new information, it isn't oversold.

Jabbles• 4 years ago

There's probably going to be a positive bounce just because markets don't move in straight lines.

To emphasize the uncertainty in your "probably", I will point out that Luna didn't bounce: https://coinmarketcap.com/currencies/terra-luna/

ascendantlogic2• 4 years ago

I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets.

I like your optimism but we are still well above what most people would consider reasonable valuations. That said there are trillions of new dollars out there that won't want to sit on the sidelines decaying at an 8% clip forever. It will be interesting to see how it plays out.

gjvc4• 4 years ago

I mean everything is a bit oversold right now

you ain't seen nuthin' yet

lkrubner• 4 years ago

"everything is a bit oversold right now on negative emotions"

No!!!

The Fed is raising rates. That is reality. That is not an emotion. That is absolute economic fact. Inflation is high and will remain high for at least a year (maybe longer). The period from 2008 to 2022 is going to be remembered as an abnormal period when we experienced abnormally low rates. The low rates fueled speculation, and bid up certain stocks and assets.

The era of low rates is over. It is possible that you might live another 100 years and never again see a 14 year stretch where rates average as low as they did from 2008 to 2022.

Emotions? No. These are not emotions. Rising rates are a material fact that people need to adjust to.

acchow• 4 years ago

How does anyone determine what oversold is?

S&P has only retraced to March 2021. Nasdaq to Oct 2020. A bunch of COVID plays like Zoom, Peloton, etc only back to summer 2019 levels. That's only 3 years back.

If you look at the dot-com boom, S&P bottomed out in 2002 back to 1997 levels. That's a 5 year retracement. Currently S&P has barely gone back 14 months.

The GFC was worse - bottomed in Dec 2008 hitting 1996 levels - a 12 year retracement. I'd say going back beyond an entire economic cycle is probably actually oversold.

this_user• 4 years ago

There certainly seemed to be a lot of selling pressure on BTC at the time that pushed the price below $30k that has since abated. It is not implausible that this had something to do with LFG's supposed activities.

DonHopkins2• 4 years ago

In a sense, the market is going to take that as kind of bullish.

The Levenshtein distance from bullish to bullshit is only 3.

mcv• 4 years ago

Honestly, that was what I read at first. Only when I read your comment, did I realise it said "bullish".

I'm not sure my initial reading was really incorrect, though.

j245• 4 years ago

And the distance between love and glove is only 1.. who cares ?

SkipperCat2• 4 years ago

Let me fix that sentence for all the HODLers. “In a sense, the market is going to take that as kind of bullshit”.

I’m sorry all crypto believers. There’s just too much chaos in crypto world for this to be anything more than a gold rush.

jrsj• 4 years ago

Historically shitcoins failing has been good for Bitcoin.

quasse• 4 years ago

I am extremely out of the loop on the latest crypto developments / schemes, but

* Where did this foundation get $3B to buy Bitcoin?

* Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

woodruffw4• 4 years ago

Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

This brings up an exceedingly funny point: blockchains excel at making every transaction public (a property that nearly nobody actually wants) and simultaneously offering complete privacy to institutional actors.

In other words: privacy for me, but not for thee.

rchaud• 4 years ago

Reminds me of the Peruvian general Óscar Benavides: “For my friends, everything; for my enemies, the law.”

The whales got a bailout, while retail got market forces.

thebean114• 4 years ago

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..

folli• 4 years ago

* From Crypto Bros putting cash in Luna, hoping it will reach the moon, as the name implies. The foundation bought BTC as hedge in case Luna/Terra goes haywire.

* No, there's no proof.

Traster3• 4 years ago

That's where it gets incredibly funny. They persuaded everyone that UST was worth $10Bn dollars and then went and bought $3Bn of BTC with the profits. At which point the obvious question is "Hey - isn't this asset by definition worth $3Bn"? And the answer is "Oh, no, by the time it drops from $10Bn to $7Bn we've burned all our collateral and it's worth 0".

Traster3• 4 years ago

On the second point, to be fair you can look at the UST graph and see that someone did indeed burn a tonne of Luna to support UST. It's probably impossible to really prove that every penny went to supporting it, and it's probably impossible/unlikely that Do Kwon really bankrupted himself for this, but at the very least we can say someone decided they were going down with the ship and set a lot of money on fire. Difficult to see who would've done that other than LFG.

skinnymuch4• 4 years ago

It’s impossible Do Kwon bankrupted himself. No one is going to do something no one believes any one in crypto or Wall Street would do and keep quiet about it: be selfless, stick to your previous words that critics never believed, and not be keeping a good chunk of money for yourself.

If this happened, we will be seeing massive PR about this. Do Kwon would become a huge symbol and become a millionaire again if he actually did that and opened his life and books to scrutiny to prove everything as much as possible.

seoaeu4• 4 years ago

Burning Luna (which can be created out of thin air) and burning USD/Bitcoin are entirely different things.

georgeecollins3• 4 years ago

This is a dry run of the Tether (USDT) collapse.

wing-_-nuts• 4 years ago

If and when that happens (and let's be honest, it probably will) a whole lot of people are about to see that bitcoin has no clothes.

NelsonMinar2• 4 years ago

Tether itself also had a dry run of the Tether collapse. It seems to mostly be holding steadyish in the past few days, but the dip down to $0.95 is a giant screaming alarm. It's still only at $0.9990; before the crisis last week it was pretty much always at $0.9998 or above.

id2• 4 years ago

Similar or worse drops happened in 2016, 2017, 2018, and 2020. In other words, business as usual for Tether.

nathanvanfleet• 4 years ago

"Dry" in what way exactly? It seemed rather wet with the enormous amount of loss?

seattle_spring• 4 years ago

I think you're getting Terra and Tether mixed up. Parent was saying the Terra explosion was a dry run for the forthcoming Tether implosion.

helsinkiandrew• 4 years ago

Tether is atleast supported with real world assets (USD/bonds etc). The amount and quality of the assets might be debatable but it can't go into a death spiral to zero like Luna and UST.

onlyrealcuzzo4• 4 years ago

Only 3.87% of Tether was backed by dollars: https://siliconangle.com/2021/05/13/tether-releases-reserve-...

So it could drop pretty far.

caymanjim2• 4 years ago

Says who? Serious question. Is there any auditing of Tether's claims, by a reputable real-economy firm? Is there any legal or regulatory authority involved at all?

calbruin2• 4 years ago

It can go into a death spiral. If confidence in Tether wanes, AND Tether is holding underperforming "cash equivalents", Tether can go to zero overnight.

georgeecollins3• 4 years ago

That's another way of saying it is a more legitimate scam which is why it has lasted longer. You are correct.

lavezzi• 4 years ago

Where is the evidence it is supported with real world assets?

realusername• 4 years ago

I'm also waiting for the USDT collapse. It was very close this time but I guess I'll have to wait more.

calbruin2• 4 years ago

Tether has never been audited. The market is about to audit them. Watch the tether market cap...

djantje2• 4 years ago

I don't understand, if $3B in bitcoin is sold to save UST we should also be able to see a equivalent of that $3B in Terra/Luna/UST buys?

I don't understand crypto, and or how the Luna/UST works, but if you supported/buy something this should be visible, not only in vanished bitcoins, or am I mistaken?

px43• 4 years ago

It was supposed to be quicker, and automatic, to prevent the collapse, but it's a relatively new system and still under manual control. In theory some set of humans have been tasked with slowly buying more and more UST to build up confidence, and restore the peg. This can't really happen because LUNA is worth basically zero now, but who knows.

djantje2• 4 years ago

Ah, yes, this part I can understand: to late with support and then the UST holders started selling, taking their loss, and in the proces devaluating UST

But the backing of UST(or Luna?) should be visible in soms large/or a lot of transaction in a small time window somewhere, if they started buying/supporting it with $3B, I would think

jallen_dot_dev• 4 years ago

Do we not? Volume of trades was in the billions during the collapse.

netheril963• 4 years ago

The volume of UST and Luna are huge for the past few days. Way more than several billions.

vmception25• 4 years ago

I mean that was the expected outcome and now people are like “proof of the expected outcome!?!”

Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional month.

And then it imploded and sold the collateral, of course it was partial collateral so it failed to do anything in a bank run.

So it doesnt matter whether we get records from exchanges or not. Nothing different would happen. People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.

lvass2• 4 years ago

So it doesnt matter whether we get records from exchanges

It matters a lot. The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof.

If they concentrated their usage of the reserves to keep the peg earlier, possibly anyone selling below $1 would take an immediate loss and no noticeable depeg would even happen. The way it was handled is extremely useful information to markets and particularly to market makers.

nradov2• 4 years ago

What's the point? There was never a real "market" in any meaningful sense. Since the beginning it was always a fake scam to separate suckers from their real (fiat) money. A combination of Ponzi scheme and shell game.

zrail• 4 years ago

The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof.

What would it change to have that information? Afaict none of this is regulated in any regard so if that happened, would there be any impact what so ever?

vmception25• 4 years ago

Nothing different would happen. People want to see Do Kwon have more reasons to have charges against him

rmbyrro• 4 years ago

This argument (rescued whales, could have rescued the coin) is just naive people failing to face they were scammed.

There's no way they could've saved it.

Crypto is supposed to be an anti central bank currency.

This is the worst central bank any type of currency could ever have.

vkou10• 4 years ago

The guy was running a blatant Ponzi scheme (20% risk free yoy return for anyone investing in a 'stable' coin is a Ponzi), and it's the fourth time he's tried this (it's the first time it grew to multiple billions).

He's not stupid, he's just a predator, and just like any other predator, belongs in prison.

dlubarov3• 4 years ago

The 20% interest was just a short-term user acquisition scheme, funded by some of the initial LUNA tokens. I don't think anyone claimed that it was sustainable.

A Ponzi would be if Anchor used users' deposits to pay out the 20% rewards, which isn't what happened here.

aqme28• 4 years ago

People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.

Does there need to be malice rather than incompetence, for charges to be filed?

snotrockets• 4 years ago

Calling it short is underselling it (lame pun not intended). This was allowing friends & family to cash out, leaving the rest of the public high and dry.

ck2• 4 years ago

So in other news, people saw enough value in bitcoin to buy $3 billion's worth

I mean that's not a trivial amount by any explanation right?

kwertyoowiyop• 4 years ago

Seems like they just used magic beans to buy other magic beans.

thedangler• 4 years ago

Whales be Whaling.

hitovst• 4 years ago

Sooner or later people are going to have to actually understand Bitcoin, and will then see that 99% of the rest of crypto are scams.

If you don't understand that freedom is the most relevant part of Bitcoin/crypto, you probably also don't understand that the few good things you take for granted if life are due to the remaining residue of freedom.. and why you didn't care when slavers eliminated it.

Figure it out soon, and save yourself things even more important than wealth.

muttantt• 4 years ago

"stablecoins", NFTs, etc. are just HYIPs reimagined.

gruez2• 4 years ago

NFTs maybe, but stablecoins? How are they comparable to "HYIPs" (high yield investment program)? Specifically, where are the "high yields"?

ericsoderstrom• 4 years ago

20% APY for staking UST

gizmo686• 4 years ago

I'm confused. I understand wanting to have a reserve fund to help maintain a peg. National currencies do this as well, including selling their reserves to prop up their own currency when needed.

However, why would a stablecoin put its reserved in Bitcoin; an asset that is highly correlated with the entire crypto ecosystem, and highly volatile relative to the asset against which they want to maintain a peg.

rory• 4 years ago

They had a small amount of other "stablecoins" as well [0]. I'm guessing it was some mix of an ideological opposition to holding actual USD and a desire to speculate on the ecosystem, which the market allowed for a time.

[0] https://twitter.com/LFG_org/status/1526126703046582272

sakopov2• 4 years ago

What's everyone's thoughts on Gemini dollar? Gemini claims [1] that GUSD is FDIC insured up to $250K and audited [2] by a third party called BMP [3]. I also remember reading that Gemini is used by a number of IRA custodians, so I'd assume that they're pretty heavily regulated.

[1] https://www.gemini.com/dollar

[2] https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq...

[3] https://www.bpm.com/

everfree3• 4 years ago

It's a completely different ball game from UST.

UST didn't even claim to be fully backed, whereas Gemini's third-party auditing accounting firm attests to GUSD being fully backed, under the scrutiny of the New York State Department Of Financial Services.

sakopov2• 4 years ago

I wasn't claiming they're same. Was just wondering what the thoughts are on another stablecoin which claims to be fully backed by USD and how valid those claims actually are. Not sure why I'm getting downvoted.

rollcat3• 4 years ago

From [1]:

GUSD is an Ethereum ERC-20 token

Last time I checked (EVERY time I checked), Ethereum was still based on proof of waste.

My thoughts are the same as they've been for many years straight, on everything crypto-"currency": it's a massive scam at best; more realistically, along with everything else in the proof of waste category, somewhere on the top 10 list of things most harmful to all life on Earth.

I don't understand how anyone even tries to mis-represent it as anything else.

once_inc• 4 years ago

I agree on your points about Ethereum and all alt-coins. Bitcoin is another matter though, because it has the majority hash rate. Please note that bitcoin mining is a fraction of a fraction of all energy use in the world, and as an industry, well ahead of its peers in terms of green energy usage. Using electricity is not a problem; carbon emission are, and there a a very substantial number of other industries that are in orders of magnitude worse to our environment (among which is gold mining, clothes dying and disposable plastics). Using electricity to separate money and state is well worth the cost to me.

edit: bring forth thy downvotes, HN.

hacker_newz• 4 years ago

This really doesn't add to the discussion. Can you provide a more nuanced take other than 'crypto is a scam'?

mdoms2• 4 years ago

Is it a cryptocurrency? Then it's a scam.

efficax• 4 years ago

They claim that GUSD holders may be eligible for FDIC “passthrough” insurance, that’s a big maybe, and a lot of depends on whether or not they really do hold a dollar in an FDIC insured account for every Gemini dollar. Who knows?

I do know of one way to be sure your money is FDIC insured. By putting your dollars in a bank.

nikolay• 4 years ago

A lot of desperation like Elon Musks' "send me your crypto and I will double it", which screams "buy as much crypto as you can to double it so that we can fix my problem with losing billions".

Animats• 4 years ago

This is puzzling. What did they do with the money? Buy back UST? Something else?

Vast numbers of LUNA were minted during the collapse. There are now 6 trillion LUNA outstanding, currently valued at $0.0002246 each. Apparently the algorithm trying to support UST did so by minting LUNA.

Does someone have a timeline of the collapse? All the data should be available on blockchains.

lubesGordi• 4 years ago

It'd be funny if a crypto crash acted as a contraction in money supply thereby helping out inflation. Finally a use for crypto!

low_tech_love4• 4 years ago

“Analysis from the company shows that 52,189 bitcoins were moved to a single account at crypto exchange Gemini”

Oh yeah sure they saw their coin going to s*%t and thought “yeah let’s just throw away a couple billion dollars just so people won’t think we are scammers”. Sure. The Vatican has started a process to canonize these saints.

vmception25• 4 years ago

uh yes exactly? thats the only reason they bought the bitcoin in the first place

Terra Luna was already stupid enough, its stupid to make this part controversial because that was the purpose of this collateral, just as its stupid to not believe the bitcoin was sold after transfer to the exchanges (many people believe that its still owned, or was given to some whales to bail just them out, or the founder keeps it for himself)

https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-...

https://www.bloomberg.com/news/newsletters/2022-04-19/crypto...

stingraycharles• 4 years ago

I know that it’s the plan, do they have any evidence (like transaction ids) that it actually happened?

I haven’t followed this a lot but from what I gathered there’s not a lot of transparency around this. If so, why not?

dstroot2• 4 years ago

Does anyone have insight to what legal exposure (if any) creator Do Kwon has? In an regulated market does he just walk away?

vmception25• 4 years ago

in a regulated market all you would simply have are some codified fiduciary duties and standardized disclosures

Terra Luna and TerraUSD's algorithmic operations were all disclosed publicly and scrutinized in the open sphere

Do Kwon stated publicly why he was buying the bitcoin - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg - and Do Kwon has stated publicly now why the bitcoin sold - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg

I think in a regulated market he just walks away just like all investment banks and bankers do

There are plenty of Exchange Traded Notes (ETNs) that obtusely say "this is dogshit and its going to fall to zero during a period of volatility" and then fall to zero during a period of volatility

Thats exactly what Terra Luna and TerraUSD did

all regulation would do is standardize the way the disclosure is done, really the most likely thing that comes from this is a regulator mandated additional sentence in a brokerage firm's 40 page disclaimer that you surely will read after consulting your financial advisor.

Its up to the consumer/investor, it always is.

lbwtaylor• 4 years ago

I disagree with part of the thrust of this argument. One of the most hidden things in crypto (despite the transparency of the chain), is who owns, controls, buys and sells coins, in particular related parties to the founders. The disclosure in the regulated markets of insider trades and conflicts of interest is much more robust than in crypto. Yes you can see transactions and wallets, but most of the knowledge is speculations and assumptions, rather than disclosure that can be litigated over. Harder for it to be up to the consumer when founders chose what to disclose, and what to obfuscate.

I don't disagree that there are ETNs that work generally as you describe.

davidw• 4 years ago

patio11's twitter commentary has been extra spicy lately.

stjohnswarts2• 4 years ago

sounds like they're throwing good crypto after bad crypto...

1vuio0pswjnm7• 4 years ago

There was a peer-to-peer network solution that was associated with this "Luna" cryptocurrency that has been discussed on HN several times. The network did not have any ostensible connection to a cryptocurrency, it looked like just another p2p software project on the surface, but if one read all the documentation one could discover the connection to "Luna". Wondering if anyone remembers the name.

loeg• 4 years ago

UST is down another 35% today, to 11 cents on the dollar.

anonu2• 4 years ago

I understand it was Citadel that accelerated the demise of UST. This is pure hearsay at this point. But we can't rule out that there was a coordinated or massive attack on the stablecoin algo.

xbar• 4 years ago

Algorithmic trading against other cryptocurrencies turned out to be less stable than backing UST with a fiat currency.

The veritable tautology in that statement would be amusing except for the sad fact that a great many ignorant investors were fleeced in this process.

$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

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