I commented on, Coinbase, Terra (LUNA), and TerraUSD yesterday. Things changed for the worse overnight.
Stablecoins are pegged to something, typically $1 but it could be anything. TerraUSD was supposed to be pegged to the US dollar.
$1 = 1 TerraUSD.
That peg broke hard on Monday.
Many readers may be wondering what TerraUSD is backed by.
The answer is nothing. Officially, it's backed an algorithm that clearly doesn't work.
Big MF Problem
Yes indeed, and it only took one day to prove it.
TerraUSD is the sister of Terra (LUNA). TerraUSD is supposed to be pegged to $1. How so? By an algorithm that clearly does not work.
TerraUSD fell to 65 cents yesterday, then rallied back to 91 cents when fools who believed in free money algorithms rushed in.
Today TerraUSD fell to 30 cents but has since rallied to 65 cents. Congrats if you bought the dip and have cashed out.
Meet Alleged Stablecoin TerraUSD, Now in a Potential Death Spiral
To understand how this all fits together in theory but not practice, please see Meet Alleged Stablecoin TerraUSD, Now in a Potential Death Spiral
Got COIN? I Hope Not. Coinbase Plunges, Extends Loss After Hours
Coinbase (COIN) is a crypto trading platform.
It lost $1.98 per share vs analysts projection of a $0.01 loss.
Yesterday, I commented Got COIN? I Hope Not. Coinbase Plunges, Extends Loss After Hours
Coinbase Plunges Another 30% Today
Coinbase Company Highlights
Get Your Assets Out Now
To understand why, please tune into the Coinbase 10-Q quarterly statement.
Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors. This may result in customers finding our custodial services more risky and less attractive and any failure to increase our customer base, discontinuation or reduction in use of our platform and products by existing customers as a result could adversely impact our business, operating results, and financial condition.
If Coinbase goes under, any assets held at Coinbase may be considered property of Coinbase, not your property.
And what happens if people pull assets? How does Coinbase pay its bills and employees?
Coinbase itself may be in a death spiral.
Yellen Renews Call for Stablecoin Regulation After TerraUSD Stumble
The Wall Street Journal reports Yellen Renews Call for Stablecoin Regulation After TerraUSD Stumble
“I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability,” Ms. Yellen said at a hearing Tuesday before the Senate Banking Committee. "We really need a consistent federal framework.”
Pennsylvania Sen. Pat Toomey, the committee’s top Republican, expressed an interest in moving quickly. “Do you think we could shoot for a goal of getting legislation done this year?” he asked in the hearing.
“I think that would be highly appropriate,” Ms. Yellen said, adding that she looks forward to working with Mr. Toomey’s staff.
What a bunch of BS.
Let It Go
Expect to hear lots more sad stories like those, thousands if not millions more.
I side with Lyn Alden.
Get the H out. The design is not stable to say the least. And if you have assets at Coinbase, please think about that too.
This post originated at MishTalk.Com.
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