Crypto-failure Terraform Labs to cough up $4.5B, liquidate self

Terraform Labs, the outfit behind the $40 billion crash of the TerraUSD stablecoin and its sibling Luna (LUNA) tokens, will pay $4.5 billion to creditors and authorities, then wind itself up. The biz rose to prominence outside cryptocurrency circles in 2022 when the value of TerraUSD dropped from $1 to just nine cents – a …

[Anonymous Coward]

Well color me surprised

Another crypto scam.

Nice to see this though, "Do Kwon and Terra orchestrated one of the largest securities frauds in US history by, among other things, falsely claiming that they had achieved the Holy Grail of crypto: a non-illicit use case,"

A damning statement about the use of crypto by criminals.

[Anonymous Coward]

Re: Well color me surprised

Indeed, who'd have thought that a string of 1s and 0s with no underlying guarantee or asset would turn out to be totally worthless.

I wonder who lost out in the Terrafom collapse, and how much they really lost purely versus their original "investment"?

[Anonymous Coward]

Re: Well color me surprised

A strong of 1s and 0s sold to you by a bunch of tech bros grinning from ear to ear as they empty your wallet and plan their escape.

I'd also be really interested to know if the losses were real or if they were just imaginary numbers based on investment "gains"

But, as much as I dislike giving an argument that draws equivelance with "real" money and crypto, you could also say the same of any government fiat currency.

[Anonymous Coward]

Re: Well color me surprised

As a broad rule, if we ignore basket case countries, fiat currency has been very dependable since sovereign guarantees and future tax payers have proved pretty reliable. Admittedly the politicians can and do steal it away through inflation and a decade or so of artificially low interest, but that's a tad different to crypto.

[simonlb]

Re: Well color me surprised

What I find really scary, is that there are pension funds actively 'investing' in crypto currencies, as if it were a genuine, reliable commodity. If there's one thing that the regulators should be banning from being anywhere near crypto, it's pension funds.

[Michael Wojcik]

Re: Well color me surprised

Another crypto scam.

Weeeell... yes, more or less. I think it's important, though, to distinguish between what appear to be sincere attempts to do something infeasible and largely pointless (which characterizes Terraform), the promotion of patently useless crap such as NFTs, and outright fraud like blatant rug-pulls.

I'm no fan of either — while some cryptocurrency stuff is academically interesting, none of the few potential legitimate use cases (such as avoiding exorbitant international money-transfer fees) are of any interest to me. And I have no complaints about this particular prosecution. I do think, however, that it's important to maintain the distinctions among various sorts of financial crimes. Details matter.

In the wildcat banking era in the US, there were banks that were deliberately committing various sorts of fraud, and there were banks that were simply trying to fill a need and doing a poor job of it, because they were run by people who didn't know what they were doing and were under-resourced. Both are problems, but they're different sorts of problems.

[Anonymous Coward]

Would anyone like to invest in my stableScamCoin /s

Would anyone like to invest in my stableScamCoin, guaranteed honest business /s

[Pascal Monett]

"its underlying blockchain being unable to scale"

Yes, blockchain does not scale. It's not news. We've known that for long enough now and nobody has found a solution for it.

So why is it that people still talk about it like it is an integral part of the "security" of their bullshit scam ?

Oh, of course, silly me. Because there's a new generation of idiots born every day . . .

[Anonymous Coward]

Re: "its underlying blockchain being unable to scale"

There is that. But plenty of them. If the web site coinmarketcap is to be believed people are even trading crypto with names like "Andrew Tate's Dog", Call of Memes Yacht Club", and other equally improbable names. I do notice scanning through the listings a fairly strong suggestion from the chosen names that crypto appeals to the MAGA, extreme GOP, self professed libertarians.

Having said that, there's a number of reasonably scaled cryptocurrencies that have some good volatility on them and sufficient liquidity; If the buyer regards crypto as nothing more serious than a flutter on the horses where they may win, or they may never see their money again, where's the harm in that? Obviously if they stake their life's savings on crypto then they shouldn't bleat if it all goes pear shaped, and I can't help feeling that the SEC are being unduly punitive, as though crypto were ever a serious investment.

And since you'll be asking, Andrew Tate's Dog is down to $0.001404 the time of writing, a long way from its high of $0.004153 this time last June. However, $0.001404 is still some serious appreciation on the $0.001094 which I think was the launch price around 18 months ago.

[Ze]

Re: "its underlying blockchain being unable to scale"

>>>I do notice scanning through the listings a fairly strong suggestion from the chosen names that crypto appeals to the MAGA, extreme GOP, self professed libertarian

Couldn't you have just replaced that with idiots or suckers. It couldn't happen to a nicer bunch of wack jobs, it's amusing seeing them get their comuppence although I do wish I did mine some Bitcoin when I first heard about it in its early days but I overestimated the intellectual capacity of people and thought it was a waste of time.

[David Hicklin]

Re: "its underlying blockchain being unable to scale"

that is what gets me about Bitcoin which is supposed to have a finite number of mineable coins, yeah I know they keep on scaling down the mining return but at some point the last coin will be mined.

And then the whole thing collapses as my understanding is that it is the mining that creates the blockchain entries

Of course I could be totally wrong and talking absolute rubbish!

[Potemkine!]

moving money around the world is slow and costly

And it's really annoying for the ones who want to launder money. Especially since big banks have been caught helping them.

[spireite]

La-la can't hear you!!

Despite all this, people still actively promote this crap as the future.

Among my circle of techs, we all know it's bollox and stay well away.

[Howard Sway]

a "stablecoin" that would maintain its value, in this case by matching the US dollar

As there was no way of maintaining the dollar peg (for central banks that try to do this, they can raise interest rates, enabling the government to sell bonds and stabilise their currency through the influx of foreign money), the most fundamental weakness of this whole scam was that if you wanted to safely buy a currency that was guaranteed to match the value of the US dollar, all you needed to do was buy US dollars.

[Paul Crawford]

Re: a "stablecoin" that would maintain its value, in this case by matching the US dollar

if you wanted to safely buy a currency that was guaranteed to match the value of the US dollar, all you needed to do was buy US dollars

One wonders why those who "invested" could not see this?

[katrinab]

Re: a "stablecoin" that would maintain its value, in this case by matching the US dollar

And if they wanted to guarantee to match the value of the US dollar, then what they needed to do was put the entire sale proceeds in a ringfenced bank account, and guarantee to buy the tokens back using that money. Kind-of like how Paypal works. Paypal makes their money from transaction fees and interest earned on the ringfenced account, not from the actual money deposited into the customer accounts.

[Anonymous Coward]

Re: a "stablecoin" that would maintain its value, in this case by matching the US dollar

Bear in mind that the attraction of stablecoin was not per se that it was (supposedly) dollar linked, but that it offered a way of carrying out (supposedly) untraceable transactions in USD, that if done through the regular banking system would set off the alarm bells with FBI, IRS, Federal Reserve, bank money laundering teams and regulators everywhere etc. They could use a crypto without the supposed dollar link but who knows what would come out relative to what you put in. For the sort of people who want to be under the financial system radar, I'm guessing the payee would be very happy if they were paid $1m, and by the time it arrived it was $1.1m. But if only $900k arrives, I'm guessing there's very bad consequences for the payer.