The cryptocurrency market has been going through tough times for the past few months. The Russia-Ukraine war was one of the first events to ignite the fuse. Then, with the effect of the war, the increase in global inflation rates came. However, none of the developments has been as striking as the last one. The tipping point for the bitcoin and altcoin markets was actually the collapse of the Terra project.
Terra’s stablecoin, UST, was always supposed to be pegged to the dollar. However, as we reported as Kriptokoin.com, the UST lost its stability at a ratio of 1:1 to the US dollar. After that, LUNA and UST fell sharply, bringing the rest of the crypto market with them. No one anticipated this event. However, according to his latest statements, Sam Bankman-Fried, CEO of FTX Bitcoin billionaire, foresaw everything. Here are the details…
Bitcoin billionaire Terra predicted its collapse
Sam Bankman, founder and CEO of crypto exchange FTX- Fried spoke in his presentation at the “Global Stock Exchange and Brokerage Conference” on Thursday. At the conference organized by Piper Sandler, the famous CEO addressed the collapse of Terra’s tokens UST and LUNA. The Bitcoin billionaire claimed in his presentation that he predicted the collapse of Terra. However, he added that he was not able to accurately calculate the extent of the collapse:
“It was pretty clear that there would be a potential problem in the Terra ecosystem, I knew it. But I didn’t expect it to end this badly.”
The famous CEO continued his words and suggested that the concept of stablecoin does not define the Terra project. “Stablecoins are cryptocurrencies that are designed to be stable,” Fried said. Also, “The cleanest example would be a bank account with as many dollars as there are tokens in circulation.” he added. Continuing his presentation, the Bitcoin billionaire stated that one feature of stablecoin projects is transparency. He then argued that people should know exactly what they are buying.
Sam Bankman-Fried slammed the Terra project
FTX CEO Sam Bankman-Fried continued to criticize the Terra project . Accordingly, the CEO thought that Terra was a project that would never work. “But what definitely shouldn’t be is a volatile cryptocurrency backing it,” said Bankman-Fried. He said that users can get TerraUSD by burning $1 worth of LUNA. “So what underpinned the 20 billion UST in circulation was the market’s ability to withstand and pay out a large number of new LUNA token issuances,” the Bitcoin billionaire said. However, this demand-supply balance was something that could change. That was the end of Terra,” he said. Finally, Bankman-Fried said that there is indeed an interesting relationship between LUNA and UST. However, he added that it is clear that the word describing this relationship is not “stable”.
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