Terra’s stablecoins crash and gives birth to new complications for De Kwon.
As we know that the crypto market crashed last week, the cryptocurrencies all around the globe lost their value. Terra’s stablecoins Terra USD and its sibling LUNA were no different. Both the stable coins almost lost 99% of the value and dropped down to a value that’s next to zero. The loss for investors was huge and for some it robbed off of their life savings. In Singapore, a victim went on to accuse De Kwon for running a Ponzi scheme.
What’s a Ponzi Scheme? How did Terra get blamed for running a Ponzi Scheme? Let’s find out!
Ponzi Scheme is a scheme where the investment made by new investors is paid off to the existing investors. It’s also called an investment fraud. The fraud is named after Charles Ponzi.
After the crypto market crash, most of the investors lost a lot of their money and were unhappy of the way Terra made statements about its stable coins. One such investor, also claimed to be a victim of the fraud filed a police report claiming that Terraform Labs CEO is accountable for running a Ponzi Scheme.
In the report, it was mentioned that, over 1000 LUNA and UST investors have been influenced to be part of a scheme which was referred to as Ponzi Scheme. The report also had content about the depegging of UST and LUNA and the result of the sell-off where the crypto market saw a loss of hundreds of billions. Almost $32 billion was lost by the investors of UST and LUNA alone.
Claims of the victims.
The victims from the crypto crash claim that, the influencers and crypto brokers who flooded the investors with false information about UST and LUNA and told them that they would earn at least 19% interest rate on the investment are also culprits.
The claims also stated that, the retail investors were duped into purchasing UST. The victims believe that even though the market crashed, De Kwon still remains a billionaire. The victims plead to De kwon to refund the victims with money that he earned with LUNA holdings. They also insist Singaporean authorities to freeze the CEO’s assets before he flees abroad.
Whether De Kwon ran a Ponzi scheme or whether the claims against him are false only more and more investigation into the matter can answer. But, it is surely sorrowful to see the retail investors being robbed off of their life savings. It is important to note that, since the crypto market is highly volatile, the profits made today can and actually has disappeared in thin air. So, as a disclaimer, it is quintessential for an investor to do a thorough research about the market before investing into cryptocurrency.