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$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

420 points by SirLJ 4y ago

stjohnswarts 4y ago
sounds like they're throwing good crypto after bad crypto...
latchkey 4y ago
I'm kind of amazed that the Bitcoin price wasn't affected more given this event as well as the larger macro events with the stock markets, Fed and inflation.
- throwaway1777 4y ago
  A lot of speculation that not all of this btc was actually sold. Sure it was transferred to an exchange but know one really knows what happened after that.
  - zekrioca 4y ago
    In the above sentence, I think the first "know" should really be "no" :)
- ChrisClark 4y ago
  Yeah, the previous crashes have been a lot more violent. The current bubble is definitely over though. Bubbles come like clockwork every 4 years (due to the 50% supply cuts every 4 years) it would be interesting to see if it happens again. Though an earlier bubble could be kicked off when ethereum cuts it's supply by 90%.
  - datalopers 4y ago
    > The current bubble is definitely over though Why do you say “over”? I see BTC reaching $20k this summer and then falling to <$10k as miners fold.
    - onlyrealcuzzo 4y ago
      Why would miners folding cause Bitcoin to drop in value? The same amount of Bitcoin will be mined no matter what.
      - ItsMonkk 4y ago
        Not quite. Bitcoin difficulty adjusts every 2000 blocks, which typically happens every two weeks. If the hashrate drops, those blocks happen less often, so the adjustment happens less often. These past years the Bitcoin ASICs have been tremendously profitable, and as a result the demand for the hardware goes up, leading to huge profits for the hardware makers. These past few months have seen a drop in Bitcoin, which drops the profit for miners, but as it is still above electricity prices, only results in cheaper hardware. If Bitcoin drops below the electricity line, you will see miners all over the world start to turn off their devices. And once that happens, block time will rise, and that will start making the entire network less trusting. This will cause a spike of people selling their coins, and with less blocks this means a packed exit. With the packed exit, you would think this would incentivize mining as transaction fees go way up, but those fees come directly from the value of the coin, so once this starts the value of the coin is going to drop heavily. With mining profitability dropping the further this goes, the longer block times, the more the price of Bitcoin goes down. If Bitcoin goes below 10k quick enough, it won't ever see another difficulty adjustment, and the entire chain dies. The developers might chose to hard-fork and change the difficulty changes algorithm, but as we've seen with Bitcoin Cash, these changes are political and don't tend to end well.
        latchkey 4y ago
        This all sounds good on paper, except for the fact that large miners don't sell their bitcoin. Even when they do, it isn't on the open markets and happens in ways that don't affect the price (OTC) and by selling options.
        tromp 4y ago
        > Bitcoin difficulty adjusts every 2000 blocks It's 6*24*7*2 = 2016 blocks, the number of 10 min intervals in 2 weeks.
  - fsckboy 4y ago
    >The current bubble is definitely over though with bitcoin hovering ~$30K, still seems like there's air in the bubble. a 50% drop (from $60K) is pretty normal for bitcoin. It could drop a lot more without shaking the confidence of the hodlers
    - ChrisClark 4y ago
      Yeah, I mean the bubble is over, it's not going to $60k. It still can drop a lot further. Am I using the word bubble wrong? Another responded in the same way. I mean it's now definitely a bear market, and going down, not up.
      - deleted 4y ago
        [deleted]
- ptudan 4y ago
  Unweathered protocols on eth failing shouldn't affect bitcoin. They're only related insofar as they are both crypto. The $3B in bitcoin sold could have been anything.
  - carnitine 4y ago
    A 3bn fire sale is going to have a price effect no matter the reasoning behind it.
  - firloop 4y ago
    Minor nit but Terra isn't a protocol on Ethereum, Terra is its own L1 that competes directly with Ethereum.
    - ptudan 4y ago
      Lol duh, I totally knew this. Thanks for the correction
- idkyall 4y ago
  Well, the value that collapsed was the exchange rate of BTC to LUNA, which is now at fractional cents per coin after hyperinflation... They kind of gave a $3B liquidity exit for holders to dump their LUNA tokens into via the LUNA/BTC pairs that they were market making
- paulpauper 4y ago
  it dropped 20% over the past week and keeps falling now.
  - fullstop 4y ago
    Netflix has dropped 45% over the last month, Amazon 27%, TSLA 27%, Disney 17%, BTCUSD 26%. I'm definitely not sold on Bitcoin, but it tracks along with tech stocks for some reason.
    - SwimSwimHungry 4y ago
      Which certainly reinforces the notion that Bitcoin is not a good "hedge" that is often claimed by bitcoin maxis. Digital gold my butt.
_fat_santa 4y ago
As of writing, CoinMarketCap values TerraUST (the stablecoin) at $0.09. Needless to say, that 3B didn't do a damn thing. No amount of cash infusions are going to save Terra, because the problem is trust.
- bushbaba 4y ago
  Or the problem is a bank run. They threw 3B to fix an issue with a bank having 40B+ in assets and seeing more than 3B of withdraws.
  - NovemberWhiskey 4y ago
    A bank run is exactly a trust issue.
- koolba 4y ago
  > Needless to say, that 3B didn't do a damn thing. If it propped it up long enough for insiders to dump their positions it did it’s served it’s purpose.
joosters 4y ago
"Sold" It's hard to show that they really sold these coins. Certainly, the LFG transferred the coins to some different exchanges. But did they truly sell them? If I was running a dodgy ponzi scheme and saw it collapsing catastrophically, I don't think I'd be throwing good money after bad trying to futilely patch it up. Much better to stash the remaining assets away somewhere and personally cash out later on. Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!
- deleted 4y ago
  [deleted]
- gjvc 4y ago
  >Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is! Good observation. I may not be Warren Buffet, but it angers me greatly to see this kind of moronic chatter masquerading as informed opinion on finance or market dynamics.
  - vmception 4y ago
    Sure, it’s a commodity and trades like a commodity. Anything that stops a supply from overwhelming demand results in an increase in price. Commodities traders accept the seasonality of their assets, and arent perma-bulls, with the exception of metals traders. Bitcoin inherits a mixture of stock traders and metals traders sentiment, where perma-bulls mentality of “number go up forever” is present but less warranted. There are obvious periodic supply and demand movements in bitcoin, just like there is in oil, natural gas, and other commodities.
    - TomSwirly 4y ago
      Oil and gas are vitally useful. They have actual value to make things and move things and power things.
      - 4y ago
quasse 4y ago
I am extremely out of the loop on the latest crypto developments / schemes, but * Where did this foundation get $3B to buy Bitcoin? * Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?
- woodruffw 4y ago
  > Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them? This brings up an exceedingly funny point: blockchains excel at making every transaction public (a property that nearly nobody actually wants) and simultaneously offering complete privacy to institutional actors. In other words: privacy for me, but not for thee.
  - rchaud 4y ago
    Reminds me of the Peruvian general Óscar Benavides: “For my friends, everything; for my enemies, the law.” The whales got a bailout, while retail got market forces.
    - juanci_to 4y ago
      Perón said a more radical version of this on camera[0]: "To friends, everything; to the enemy, not even justice" "Al amigo, todo; al enemigo, ni justicia." [0]: https://www.youtube.com/watch?v=WDh9M9aty4U https://www.youtube.com/watch?v=WDh9M9aty4U
  - thebean11 4y ago
    Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..
    - woodruffw 4y ago
      > Why can't non-institutional actors achieve the same level of privacy? Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."
georgeecollins 4y ago
This is a dry run of the Tether (USDT) collapse.
- realusername 4y ago
  I'm also waiting for the USDT collapse. It was very close this time but I guess I'll have to wait more.
- wing-_-nuts 4y ago
  If and when that happens (and let's be honest, it probably will) a whole lot of people are about to see that bitcoin has no clothes.
- NelsonMinar 4y ago
  Tether itself also had a dry run of the Tether collapse. It seems to mostly be holding steadyish in the past few days, but the dip down to $0.95 is a giant screaming alarm. It's still only at $0.9990; before the crisis last week it was pretty much always at $0.9998 or above.
  - id 4y ago
    Similar or worse drops happened in 2016, 2017, 2018, and 2020. In other words, business as usual for Tether.
    - georgeecollins 4y ago
      Yes, and like $50b-$100b worth of trades each day are in USDT, with a market cap of $73b. That's according to coinbase, I can't verify it. When I look at people talking about trading crypto currency on reddit they just don't seem that sophisticated. I am not bashing on crypto, but this seems like a systemic risk people are oblivious to. It won't wipe everything out, but it can't be good for the price.
- nathanvanfleet 4y ago
  "Dry" in what way exactly? It seemed rather wet with the enormous amount of loss?
djantje 4y ago
I don't understand, if $3B in bitcoin is sold to save UST we should also be able to see a equivalent of that $3B in Terra/Luna/UST buys? I don't understand crypto, and or how the Luna/UST works, but if you supported/buy something this should be visible, not only in vanished bitcoins, or am I mistaken?
- px43 4y ago
  It was supposed to be quicker, and automatic, to prevent the collapse, but it's a relatively new system and still under manual control. In theory some set of humans have been tasked with slowly buying more and more UST to build up confidence, and restore the peg. This can't really happen because LUNA is worth basically zero now, but who knows.
  - djantje 4y ago
    Ah, yes, this part I can understand: to late with support and then the UST holders started selling, taking their loss, and in the proces devaluating UST But the backing of UST(or Luna?) should be visible in soms large/or a lot of transaction in a small time window somewhere, if they started buying/supporting it with $3B, I would think
- jallen_dot_dev 4y ago
  Do we not? Volume of trades was in the billions during the collapse.
- netheril96 4y ago
  The volume of UST and Luna are huge for the past few days. Way more than several billions.
vmception 4y ago
I mean that was the expected outcome and now people are like “proof of the expected outcome!?!” Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional month. And then it imploded and sold the collateral, of course it was partial collateral so it failed to do anything in a bank run. So it doesnt matter whether we get records from exchanges or not. Nothing different would happen. People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.
- lvass 4y ago
  >So it doesnt matter whether we get records from exchanges It matters a lot. The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof. If they concentrated their usage of the reserves to keep the peg earlier, possibly anyone selling below $1 would take an immediate loss and no noticeable depeg would even happen. The way it was handled is extremely useful information to markets and particularly to market makers.
  - nradov 4y ago
    What's the point? There was never a real "market" in any meaningful sense. Since the beginning it was always a fake scam to separate suckers from their real (fiat) money. A combination of Ponzi scheme and shell game.
  - zrail 4y ago
    > The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof. What would it change to have that information? Afaict none of this is regulated in any regard so if that happened, would there be any impact what so ever?
snotrockets 4y ago
Calling it short is underselling it (lame pun not intended). This was allowing friends & family to cash out, leaving the rest of the public high and dry.
ck2 4y ago
So in other news, people saw enough value in bitcoin to buy $3 billion's worth I mean that's not a trivial amount by any explanation right?
- kwertyoowiyop 4y ago
  Seems like they just used magic beans to buy other magic beans.
thedangler 4y ago
Whales be Whaling.
hitovst 4y ago
Sooner or later people are going to have to actually understand Bitcoin, and will then see that 99% of the rest of crypto are scams. If you don't understand that freedom is the most relevant part of Bitcoin/crypto, you probably also don't understand that the few good things you take for granted if life are due to the remaining residue of freedom.. and why you didn't care when slavers eliminated it. Figure it out soon, and save yourself things even more important than wealth.
muttantt 4y ago
"stablecoins", NFTs, etc. are just HYIPs reimagined.
- gruez 4y ago
  NFTs maybe, but stablecoins? How are they comparable to "HYIPs" (high yield investment program)? Specifically, where are the "high yields"?
  - ericsoderstrom 4y ago
    20% APY for staking UST
gizmo686 4y ago
I'm confused. I understand wanting to have a reserve fund to help maintain a peg. National currencies do this as well, including selling their reserves to prop up their own currency when needed. However, why would a stablecoin put its reserved in Bitcoin; an asset that is highly correlated with the entire crypto ecosystem, and highly volatile relative to the asset against which they want to maintain a peg.
- rory 4y ago
  They had a small amount of other "stablecoins" as well [0]. I'm guessing it was some mix of an ideological opposition to holding actual USD and a desire to speculate on the ecosystem, which the market allowed for a time. [0] https://twitter.com/LFG_org/status/1526126703046582272 https://twitter.com/LFG_org/status/1526126703046582272
sakopov 4y ago
What's everyone's thoughts on Gemini dollar? Gemini claims [1] that GUSD is FDIC insured up to $250K and audited [2] by a third party called BMP [3]. I also remember reading that Gemini is used by a number of IRA custodians, so I'd assume that they're pretty heavily regulated. [1] https://www.gemini.com/dollar https://www.gemini.com/dollar [2] https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6EqFnm/8dae03169f391431130e2e0e73913638/Gemini_Dollar_Examination_Report_03-31-22.pdf https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq... [3] https://www.bpm.com/ https://www.bpm.com/
- everfree 4y ago
  It's a completely different ball game from UST. UST didn't even claim to be fully backed, whereas Gemini's third-party auditing accounting firm attests to GUSD being fully backed, under the scrutiny of the New York State Department Of Financial Services.
  - sakopov 4y ago
    I wasn't claiming they're same. Was just wondering what the thoughts are on another stablecoin which claims to be fully backed by USD and how valid those claims actually are. Not sure why I'm getting downvoted.
    - everfree 4y ago
      I didn't assume that you were claiming that, and I didn't downvote you. If I had to guess, people here are pretty sensitive to any crypto project being mentioned in the comments out of the blue, so that may be part of the reason for downvotes.
- mdoms 4y ago
  Is it a cryptocurrency? Then it's a scam.
- rollcat 4y ago
  From [1]: > GUSD is an Ethereum ERC-20 token Last time I checked (EVERY time I checked), Ethereum was still based on proof of waste. My thoughts are the same as they've been for many years straight, on everything crypto-"currency": it's a massive scam at best; more realistically, along with everything else in the proof of waste category, somewhere on the top 10 list of things most harmful to all life on Earth. I don't understand how anyone even tries to mis-represent it as anything else.
nikolay 4y ago
A lot of desperation like Elon Musks' "send me your crypto and I will double it", which screams "buy as much crypto as you can to double it so that we can fix my problem with losing billions".
Animats 4y ago
This is puzzling. What did they do with the money? Buy back UST? Something else? Vast numbers of LUNA were minted during the collapse. There are now 6 trillion LUNA outstanding, currently valued at $0.0002246 each. Apparently the algorithm trying to support UST did so by minting LUNA. Does someone have a timeline of the collapse? All the data should be available on blockchains.
lubesGordi 4y ago
It'd be funny if a crypto crash acted as a contraction in money supply thereby helping out inflation. Finally a use for crypto!
low_tech_love 4y ago
“Analysis from the company shows that 52,189 bitcoins were moved to a single account at crypto exchange Gemini” Oh yeah sure they saw their coin going to s*%t and thought “yeah let’s just throw away a couple billion dollars just so people won’t think we are scammers”. Sure. The Vatican has started a process to canonize these saints.
- vmception 4y ago
  uh yes exactly? thats the only reason they bought the bitcoin in the first place Terra Luna was already stupid enough, its stupid to make this part controversial because that was the purpose of this collateral, just as its stupid to not believe the bitcoin was sold after transfer to the exchanges (many people believe that its still owned, or was given to some whales to bail just them out, or the founder keeps it for himself) https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-of-bitcoin-heres-why/ https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-... https://www.bloomberg.com/news/newsletters/2022-04-19/crypto-news-do-kwon-of-luna-terra-fame-has-10-billion-bitcoin-plan https://www.bloomberg.com/news/newsletters/2022-04-19/crypto...
  - stingraycharles 4y ago
    I know that it’s the plan, do they have any evidence (like transaction ids) that it actually happened? I haven’t followed this a lot but from what I gathered there’s not a lot of transparency around this. If so, why not?
    - vmception 4y ago
      There are transaction IDs to the exchanges There wont be transaction IDs after that because its not onchain You and the community could ask for an audit by an accounting firm like Deloitte, like the rest of the business world uses, itll come out a quarter or two from now leaving us all in exactly the same spot for now. The transparency expectations make almost no sense or lack inspiration.
      - 4y ago
dstroot 4y ago
Does anyone have insight to what legal exposure (if any) creator Do Kwon has? In an regulated market does he just walk away?
- vmception 4y ago
  in a regulated market all you would simply have are some codified fiduciary duties and standardized disclosures Terra Luna and TerraUSD's algorithmic operations were all disclosed publicly and scrutinized in the open sphere Do Kwon stated publicly why he was buying the bitcoin - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg - and Do Kwon has stated publicly now why the bitcoin sold - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg I think in a regulated market he just walks away just like all investment banks and bankers do There are plenty of Exchange Traded Notes (ETNs) that obtusely say "this is dogshit and its going to fall to zero during a period of volatility" and then fall to zero during a period of volatility Thats exactly what Terra Luna and TerraUSD did all regulation would do is standardize the way the disclosure is done, really the most likely thing that comes from this is a regulator mandated additional sentence in a brokerage firm's 40 page disclaimer that you surely will read after consulting your financial advisor. Its up to the consumer/investor, it always is.
  - lbwtaylor 4y ago
    I disagree with part of the thrust of this argument. One of the most hidden things in crypto (despite the transparency of the chain), is who owns, controls, buys and sells coins, in particular related parties to the founders. The disclosure in the regulated markets of insider trades and conflicts of interest is much more robust than in crypto. Yes you can see transactions and wallets, but most of the knowledge is speculations and assumptions, rather than disclosure that can be litigated over. Harder for it to be up to the consumer when founders chose what to disclose, and what to obfuscate. I don't disagree that there are ETNs that work generally as you describe.
davidw 4y ago
patio11's twitter commentary has been extra spicy lately.
1vuio0pswjnm7 4y ago
There was a peer-to-peer network solution that was associated with this "Luna" cryptocurrency that has been discussed on HN several times. The network did not have any ostensible connection to a cryptocurrency, it looked like just another p2p software project on the surface, but if one read all the documentation one could discover the connection to "Luna". Wondering if anyone remembers the name.
loeg 4y ago
UST is down another 35% today, to 11 cents on the dollar.
bumblebritches5 4y ago
anonu 4y ago
I understand it was Citadel that accelerated the demise of UST. This is pure hearsay at this point. But we can't rule out that there was a coordinated or massive attack on the stablecoin algo.
xbar 4y ago
Algorithmic trading against other cryptocurrencies turned out to be less stable than backing UST with a fiat currency. The veritable tautology in that statement would be amusing except for the sad fact that a great many ignorant investors were fleeced in this process.

420 points by SirLJ 4y ago

sounds like they're throwing good crypto after bad crypto...

I'm kind of amazed that the Bitcoin price wasn't affected more given this event as well as the larger macro events with the stock markets, Fed and inflation.

throwaway1777 4y ago
A lot of speculation that not all of this btc was actually sold. Sure it was transferred to an exchange but know one really knows what happened after that.
- zekrioca 4y ago
  In the above sentence, I think the first "know" should really be "no" :)
ChrisClark 4y ago
Yeah, the previous crashes have been a lot more violent. The current bubble is definitely over though. Bubbles come like clockwork every 4 years (due to the 50% supply cuts every 4 years) it would be interesting to see if it happens again. Though an earlier bubble could be kicked off when ethereum cuts it's supply by 90%.
- datalopers 4y ago
  > The current bubble is definitely over though Why do you say “over”? I see BTC reaching $20k this summer and then falling to <$10k as miners fold.
  - onlyrealcuzzo 4y ago
    Why would miners folding cause Bitcoin to drop in value? The same amount of Bitcoin will be mined no matter what.
    - ItsMonkk 4y ago
      Not quite. Bitcoin difficulty adjusts every 2000 blocks, which typically happens every two weeks. If the hashrate drops, those blocks happen less often, so the adjustment happens less often. These past years the Bitcoin ASICs have been tremendously profitable, and as a result the demand for the hardware goes up, leading to huge profits for the hardware makers. These past few months have seen a drop in Bitcoin, which drops the profit for miners, but as it is still above electricity prices, only results in cheaper hardware. If Bitcoin drops below the electricity line, you will see miners all over the world start to turn off their devices. And once that happens, block time will rise, and that will start making the entire network less trusting. This will cause a spike of people selling their coins, and with less blocks this means a packed exit. With the packed exit, you would think this would incentivize mining as transaction fees go way up, but those fees come directly from the value of the coin, so once this starts the value of the coin is going to drop heavily. With mining profitability dropping the further this goes, the longer block times, the more the price of Bitcoin goes down. If Bitcoin goes below 10k quick enough, it won't ever see another difficulty adjustment, and the entire chain dies. The developers might chose to hard-fork and change the difficulty changes algorithm, but as we've seen with Bitcoin Cash, these changes are political and don't tend to end well.
      - latchkey 4y ago
        This all sounds good on paper, except for the fact that large miners don't sell their bitcoin. Even when they do, it isn't on the open markets and happens in ways that don't affect the price (OTC) and by selling options.
      - tromp 4y ago
        > Bitcoin difficulty adjusts every 2000 blocks It's 6*24*7*2 = 2016 blocks, the number of 10 min intervals in 2 weeks.
- fsckboy 4y ago
  >The current bubble is definitely over though with bitcoin hovering ~$30K, still seems like there's air in the bubble. a 50% drop (from $60K) is pretty normal for bitcoin. It could drop a lot more without shaking the confidence of the hodlers
  - ChrisClark 4y ago
    Yeah, I mean the bubble is over, it's not going to $60k. It still can drop a lot further. Am I using the word bubble wrong? Another responded in the same way. I mean it's now definitely a bear market, and going down, not up.
    - deleted 4y ago
      [deleted]
ptudan 4y ago
Unweathered protocols on eth failing shouldn't affect bitcoin. They're only related insofar as they are both crypto. The $3B in bitcoin sold could have been anything.
- carnitine 4y ago
  A 3bn fire sale is going to have a price effect no matter the reasoning behind it.
- firloop 4y ago
  Minor nit but Terra isn't a protocol on Ethereum, Terra is its own L1 that competes directly with Ethereum.
  - ptudan 4y ago
    Lol duh, I totally knew this. Thanks for the correction
idkyall 4y ago
Well, the value that collapsed was the exchange rate of BTC to LUNA, which is now at fractional cents per coin after hyperinflation... They kind of gave a $3B liquidity exit for holders to dump their LUNA tokens into via the LUNA/BTC pairs that they were market making
paulpauper 4y ago
it dropped 20% over the past week and keeps falling now.
- fullstop 4y ago
  Netflix has dropped 45% over the last month, Amazon 27%, TSLA 27%, Disney 17%, BTCUSD 26%. I'm definitely not sold on Bitcoin, but it tracks along with tech stocks for some reason.
  - SwimSwimHungry 4y ago
    Which certainly reinforces the notion that Bitcoin is not a good "hedge" that is often claimed by bitcoin maxis. Digital gold my butt.

_fat_santa 4y ago

As of writing, CoinMarketCap values TerraUST (the stablecoin) at $0.09. Needless to say, that 3B didn't do a damn thing. No amount of cash infusions are going to save Terra, because the problem is trust.

bushbaba 4y ago
Or the problem is a bank run. They threw 3B to fix an issue with a bank having 40B+ in assets and seeing more than 3B of withdraws.
- NovemberWhiskey 4y ago
  A bank run is exactly a trust issue.
koolba 4y ago
> Needless to say, that 3B didn't do a damn thing. If it propped it up long enough for insiders to dump their positions it did it’s served it’s purpose.

joosters 4y ago

"Sold" It's hard to show that they really sold these coins. Certainly, the LFG transferred the coins to some different exchanges. But did they truly sell them? If I was running a dodgy ponzi scheme and saw it collapsing catastrophically, I don't think I'd be throwing good money after bad trying to futilely patch it up. Much better to stash the remaining assets away somewhere and personally cash out later on. Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!

deleted 4y ago
[deleted]
gjvc 4y ago
>Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is! Good observation. I may not be Warren Buffet, but it angers me greatly to see this kind of moronic chatter masquerading as informed opinion on finance or market dynamics.
- vmception 4y ago
  Sure, it’s a commodity and trades like a commodity. Anything that stops a supply from overwhelming demand results in an increase in price. Commodities traders accept the seasonality of their assets, and arent perma-bulls, with the exception of metals traders. Bitcoin inherits a mixture of stock traders and metals traders sentiment, where perma-bulls mentality of “number go up forever” is present but less warranted. There are obvious periodic supply and demand movements in bitcoin, just like there is in oil, natural gas, and other commodities.
  - TomSwirly 4y ago
    Oil and gas are vitally useful. They have actual value to make things and move things and power things.
    - 4y ago

quasse 4y ago

I am extremely out of the loop on the latest crypto developments / schemes, but * Where did this foundation get $3B to buy Bitcoin? * Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

woodruffw 4y ago
> Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them? This brings up an exceedingly funny point: blockchains excel at making every transaction public (a property that nearly nobody actually wants) and simultaneously offering complete privacy to institutional actors. In other words: privacy for me, but not for thee.
- rchaud 4y ago
  Reminds me of the Peruvian general Óscar Benavides: “For my friends, everything; for my enemies, the law.” The whales got a bailout, while retail got market forces.
  - juanci_to 4y ago
    Perón said a more radical version of this on camera[0]: "To friends, everything; to the enemy, not even justice" "Al amigo, todo; al enemigo, ni justicia." [0]: https://www.youtube.com/watch?v=WDh9M9aty4U https://www.youtube.com/watch?v=WDh9M9aty4U
- thebean11 4y ago
  Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..
  - woodruffw 4y ago
    > Why can't non-institutional actors achieve the same level of privacy? Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."

georgeecollins 4y ago

This is a dry run of the Tether (USDT) collapse.

realusername 4y ago
I'm also waiting for the USDT collapse. It was very close this time but I guess I'll have to wait more.
wing-_-nuts 4y ago
If and when that happens (and let's be honest, it probably will) a whole lot of people are about to see that bitcoin has no clothes.
NelsonMinar 4y ago
Tether itself also had a dry run of the Tether collapse. It seems to mostly be holding steadyish in the past few days, but the dip down to $0.95 is a giant screaming alarm. It's still only at $0.9990; before the crisis last week it was pretty much always at $0.9998 or above.
- id 4y ago
  Similar or worse drops happened in 2016, 2017, 2018, and 2020. In other words, business as usual for Tether.
  - georgeecollins 4y ago
    Yes, and like $50b-$100b worth of trades each day are in USDT, with a market cap of $73b. That's according to coinbase, I can't verify it. When I look at people talking about trading crypto currency on reddit they just don't seem that sophisticated. I am not bashing on crypto, but this seems like a systemic risk people are oblivious to. It won't wipe everything out, but it can't be good for the price.
nathanvanfleet 4y ago
"Dry" in what way exactly? It seemed rather wet with the enormous amount of loss?

djantje 4y ago

I don't understand, if $3B in bitcoin is sold to save UST we should also be able to see a equivalent of that $3B in Terra/Luna/UST buys? I don't understand crypto, and or how the Luna/UST works, but if you supported/buy something this should be visible, not only in vanished bitcoins, or am I mistaken?

px43 4y ago
It was supposed to be quicker, and automatic, to prevent the collapse, but it's a relatively new system and still under manual control. In theory some set of humans have been tasked with slowly buying more and more UST to build up confidence, and restore the peg. This can't really happen because LUNA is worth basically zero now, but who knows.
- djantje 4y ago
  Ah, yes, this part I can understand: to late with support and then the UST holders started selling, taking their loss, and in the proces devaluating UST But the backing of UST(or Luna?) should be visible in soms large/or a lot of transaction in a small time window somewhere, if they started buying/supporting it with $3B, I would think
jallen_dot_dev 4y ago
Do we not? Volume of trades was in the billions during the collapse.
netheril96 4y ago
The volume of UST and Luna are huge for the past few days. Way more than several billions.

vmception 4y ago

I mean that was the expected outcome and now people are like “proof of the expected outcome!?!” Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional month. And then it imploded and sold the collateral, of course it was partial collateral so it failed to do anything in a bank run. So it doesnt matter whether we get records from exchanges or not. Nothing different would happen. People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.

lvass 4y ago
>So it doesnt matter whether we get records from exchanges It matters a lot. The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof. If they concentrated their usage of the reserves to keep the peg earlier, possibly anyone selling below $1 would take an immediate loss and no noticeable depeg would even happen. The way it was handled is extremely useful information to markets and particularly to market makers.
- nradov 4y ago
  What's the point? There was never a real "market" in any meaningful sense. Since the beginning it was always a fake scam to separate suckers from their real (fiat) money. A combination of Ponzi scheme and shell game.
- zrail 4y ago
  > The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof. What would it change to have that information? Afaict none of this is regulated in any regard so if that happened, would there be any impact what so ever?

snotrockets 4y ago

Calling it short is underselling it (lame pun not intended). This was allowing friends & family to cash out, leaving the rest of the public high and dry.

ck2 4y ago

So in other news, people saw enough value in bitcoin to buy $3 billion's worth I mean that's not a trivial amount by any explanation right?

kwertyoowiyop 4y ago
Seems like they just used magic beans to buy other magic beans.

thedangler 4y ago

Whales be Whaling.

hitovst 4y ago

Sooner or later people are going to have to actually understand Bitcoin, and will then see that 99% of the rest of crypto are scams. If you don't understand that freedom is the most relevant part of Bitcoin/crypto, you probably also don't understand that the few good things you take for granted if life are due to the remaining residue of freedom.. and why you didn't care when slavers eliminated it. Figure it out soon, and save yourself things even more important than wealth.

muttantt 4y ago

"stablecoins", NFTs, etc. are just HYIPs reimagined.

gruez 4y ago
NFTs maybe, but stablecoins? How are they comparable to "HYIPs" (high yield investment program)? Specifically, where are the "high yields"?
- ericsoderstrom 4y ago
  20% APY for staking UST

gizmo686 4y ago

I'm confused. I understand wanting to have a reserve fund to help maintain a peg. National currencies do this as well, including selling their reserves to prop up their own currency when needed. However, why would a stablecoin put its reserved in Bitcoin; an asset that is highly correlated with the entire crypto ecosystem, and highly volatile relative to the asset against which they want to maintain a peg.

rory 4y ago
They had a small amount of other "stablecoins" as well [0]. I'm guessing it was some mix of an ideological opposition to holding actual USD and a desire to speculate on the ecosystem, which the market allowed for a time. [0] https://twitter.com/LFG_org/status/1526126703046582272 https://twitter.com/LFG_org/status/1526126703046582272

sakopov 4y ago

What's everyone's thoughts on Gemini dollar? Gemini claims [1] that GUSD is FDIC insured up to $250K and audited [2] by a third party called BMP [3]. I also remember reading that Gemini is used by a number of IRA custodians, so I'd assume that they're pretty heavily regulated. [1] https://www.gemini.com/dollar https://www.gemini.com/dollar [2] https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6EqFnm/8dae03169f391431130e2e0e73913638/Gemini_Dollar_Examination_Report_03-31-22.pdf https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq... [3] https://www.bpm.com/ https://www.bpm.com/

everfree 4y ago
It's a completely different ball game from UST. UST didn't even claim to be fully backed, whereas Gemini's third-party auditing accounting firm attests to GUSD being fully backed, under the scrutiny of the New York State Department Of Financial Services.
- sakopov 4y ago
  I wasn't claiming they're same. Was just wondering what the thoughts are on another stablecoin which claims to be fully backed by USD and how valid those claims actually are. Not sure why I'm getting downvoted.
  - everfree 4y ago
    I didn't assume that you were claiming that, and I didn't downvote you. If I had to guess, people here are pretty sensitive to any crypto project being mentioned in the comments out of the blue, so that may be part of the reason for downvotes.
mdoms 4y ago
Is it a cryptocurrency? Then it's a scam.
rollcat 4y ago
From [1]: > GUSD is an Ethereum ERC-20 token Last time I checked (EVERY time I checked), Ethereum was still based on proof of waste. My thoughts are the same as they've been for many years straight, on everything crypto-"currency": it's a massive scam at best; more realistically, along with everything else in the proof of waste category, somewhere on the top 10 list of things most harmful to all life on Earth. I don't understand how anyone even tries to mis-represent it as anything else.

nikolay 4y ago

A lot of desperation like Elon Musks' "send me your crypto and I will double it", which screams "buy as much crypto as you can to double it so that we can fix my problem with losing billions".

Animats 4y ago

This is puzzling. What did they do with the money? Buy back UST? Something else? Vast numbers of LUNA were minted during the collapse. There are now 6 trillion LUNA outstanding, currently valued at $0.0002246 each. Apparently the algorithm trying to support UST did so by minting LUNA. Does someone have a timeline of the collapse? All the data should be available on blockchains.

lubesGordi 4y ago

It'd be funny if a crypto crash acted as a contraction in money supply thereby helping out inflation. Finally a use for crypto!

low_tech_love 4y ago

“Analysis from the company shows that 52,189 bitcoins were moved to a single account at crypto exchange Gemini” Oh yeah sure they saw their coin going to s*%t and thought “yeah let’s just throw away a couple billion dollars just so people won’t think we are scammers”. Sure. The Vatican has started a process to canonize these saints.

vmception 4y ago
uh yes exactly? thats the only reason they bought the bitcoin in the first place Terra Luna was already stupid enough, its stupid to make this part controversial because that was the purpose of this collateral, just as its stupid to not believe the bitcoin was sold after transfer to the exchanges (many people believe that its still owned, or was given to some whales to bail just them out, or the founder keeps it for himself) https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-of-bitcoin-heres-why/ https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-... https://www.bloomberg.com/news/newsletters/2022-04-19/crypto-news-do-kwon-of-luna-terra-fame-has-10-billion-bitcoin-plan https://www.bloomberg.com/news/newsletters/2022-04-19/crypto...
- stingraycharles 4y ago
  I know that it’s the plan, do they have any evidence (like transaction ids) that it actually happened? I haven’t followed this a lot but from what I gathered there’s not a lot of transparency around this. If so, why not?
  - vmception 4y ago
    There are transaction IDs to the exchanges There wont be transaction IDs after that because its not onchain You and the community could ask for an audit by an accounting firm like Deloitte, like the rest of the business world uses, itll come out a quarter or two from now leaving us all in exactly the same spot for now. The transparency expectations make almost no sense or lack inspiration.
    - 4y ago

dstroot 4y ago

Does anyone have insight to what legal exposure (if any) creator Do Kwon has? In an regulated market does he just walk away?

vmception 4y ago
in a regulated market all you would simply have are some codified fiduciary duties and standardized disclosures Terra Luna and TerraUSD's algorithmic operations were all disclosed publicly and scrutinized in the open sphere Do Kwon stated publicly why he was buying the bitcoin - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg - and Do Kwon has stated publicly now why the bitcoin sold - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg I think in a regulated market he just walks away just like all investment banks and bankers do There are plenty of Exchange Traded Notes (ETNs) that obtusely say "this is dogshit and its going to fall to zero during a period of volatility" and then fall to zero during a period of volatility Thats exactly what Terra Luna and TerraUSD did all regulation would do is standardize the way the disclosure is done, really the most likely thing that comes from this is a regulator mandated additional sentence in a brokerage firm's 40 page disclaimer that you surely will read after consulting your financial advisor. Its up to the consumer/investor, it always is.
- lbwtaylor 4y ago
  I disagree with part of the thrust of this argument. One of the most hidden things in crypto (despite the transparency of the chain), is who owns, controls, buys and sells coins, in particular related parties to the founders. The disclosure in the regulated markets of insider trades and conflicts of interest is much more robust than in crypto. Yes you can see transactions and wallets, but most of the knowledge is speculations and assumptions, rather than disclosure that can be litigated over. Harder for it to be up to the consumer when founders chose what to disclose, and what to obfuscate. I don't disagree that there are ETNs that work generally as you describe.

davidw 4y ago

patio11's twitter commentary has been extra spicy lately.

1vuio0pswjnm7 4y ago

There was a peer-to-peer network solution that was associated with this "Luna" cryptocurrency that has been discussed on HN several times. The network did not have any ostensible connection to a cryptocurrency, it looked like just another p2p software project on the surface, but if one read all the documentation one could discover the connection to "Luna". Wondering if anyone remembers the name.

loeg 4y ago

UST is down another 35% today, to 11 cents on the dollar.

bumblebritches5 4y ago

anonu 4y ago

I understand it was Citadel that accelerated the demise of UST. This is pure hearsay at this point. But we can't rule out that there was a coordinated or massive attack on the stablecoin algo.

xbar 4y ago

Algorithmic trading against other cryptocurrencies turned out to be less stable than backing UST with a fiat currency. The veritable tautology in that statement would be amusing except for the sad fact that a great many ignorant investors were fleeced in this process.