A US-based company called Stablegains transferred investors’ money to Anchor in the Terra ecosystem, but investors were not aware of it. Therefore, Stablegains users were also affected by the LUNA and UST incidents, and the company was sued after it was revealed. Here are the details…
LUNA and UST incident negatively impacted Stablegains customers
Cryptocurrencies are notorious for volatility, they can rise and fall exponentially but stablecoins have a certain currency must be fixed to the unit. This is one of the many reasons why stablecoins are seen as one of the safest investment options for those trying to avoid the volatility of the crypto market. However, as Cryptokoin.com reported last week, unexpectedly, the TerraUSD (UST) token diverged from the US dollar peg. In other words, it declined when it was supposed to be traded at 1 dollar.
This lowered the overall value of the Terra ecosystem and wiped out 95 percent of investors’ wealth overnight. Terra’s fall not only caused investors to lose faith in cryptocurrencies, but also made them realize that there is volatility in all cryptocurrencies, no matter how safe a crypto investment may seem. One of the many reasons experts think TerraUSD has crashed is because it’s an algorithmic stablecoin. As the reports indicate, algorithmic stablecoins pose serious threats to investors’ wealth and profits.
Money transferred to Anchor melted
Stablegains, a small US-based startup, lost money when users deposited their investment in Terra-backed Anchor without giving any information. The company was giving a 15 percent return guarantee to its investing customers. Values displayed in US dollars on the company’s website have been converted to UST, Terra’s stablecoin. Some of the customers who lost their investments sued the company. The subject was brought up by a user named FatManTerra. The user’s tweet includes the following statements:
Stablegains received customers’ USDC and USD investment, transferring them all to Anchor without notice. Meanwhile, they took 4% of themselves. They have now changed the values in their app from USD to UST, they are changing the login page and old terms. They’re in big trouble – they’ve lost around $42 million in funding from 4,878 clients, and since they’re a small startup, they probably have no way of paying it back.
These guys are in deep trouble – they lost about $42m in funds from 4,878 customers and probably have no way to pay it back (they're a small startup) because they went all in on Anchor's invincibility. Conviction bets are great, but not when toying with people's savings. (2/2) pic.twitter.com/p9S5uFILoF
— FatMan (@FatManTerra) May 19, 2022
