Home - Altcoins - The Stablecoin Market Is Still in a Fix


May 20, 2022

The Stablecoin Market Is Still in a Fix

When Terra LUNA and its UST stablecoin crashed, Stablegains allegedly placed investor assets in Anchor Protocol without alerting them, losing around $42 million.

Yield calculator After losing more than $42 million in UST via Anchor protocol without alerting clients, Stablegains faces claims of abusing clients’ money – and even a lawsuit.

According to social media reports, the company guaranteed clients a 15% profit on both USDC and fiat USD investments. However, it took the money and invested it in UST in Anchor at a 20% yield, skimming the gains above 15%. Clients were unaware of this until UST depegged from the dollar and fell to less than 1 cent, causing the firm to lose millions of dollars.

The story initially broke online when an investor shared a letter from law firm Erickson Kramer Osborne to Stablegains. The letter stated that all communications and records should be preserved and kept in case of any lawsuit.

Stablegains has officially refuted the charges, claiming that it has always been open about its UST and Anchor yield.

Stablegains further stated that all funds deposited are placed in Anchor Protocol utilizing UST and that this is the only DeFi protocol they interface with, as stated in pertinent learning center articles and their Terms of Use.

However, additional social media charges indicate that the corporation has begun changing and updating its terms of service in order to avoid culpability. It has also altered the currency on its page from USD to UST.

Since the UST fall, investors believe the corporation has become less honest and has begun to modify information on numerous pages of its website.

Also Read:  Miami Blockchain Week: A Deep Dive into the Future of Blockchain Technology

Investors who want to withdraw their funds must additionally sign a waiver agreeing that Stablegains is not responsible for any losses incurred as a result of exchanging UST for USDC and fiat.

Investors are being compelled to withdraw because if they keep their UST in Stablegains, they will not be eligible for an airdrop of the forked Terra LUNA coin.

The Stablegains debacle is a continuation of the UST debacle’s consequences. The crash cost several retail investors billions of dollars. Binance also suffered a setback as the $1.6 billion LUNA tokens fell below $3,000.

Hashed Ventures is one of the largest losers. After LUNA plummeted owing to staking around 50 million LUNA tokens, the venture capital firm based in Seoul appeared to have lost $3.5 billion.

Delphi Digital has also stated that the Terra disaster cost them money. The research firm and investor expressed reservations about LUNA and UST, but believed that Bitcoin reserves would keep the currency from collapsing.