20 ms·

We’re discontinuing the Stablegains service

324 points by mkeeter 4y ago

axiosgunnar 4y ago
This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?
- lupire 4y ago
  A fraudulent company going bankrupt because the fraud collapsed.
  - xvector 4y ago
    Source on the company being fraudulent? Source on Terra being a fraud? Please provide sources for your ad-hominems.
    - npc12345 4y ago
      (I upvoted you btw, I don't like to censor). I'm a maximalist and even I am not that disingenous.
      - xvector 4y ago
        I simply do not believe it was fraud, and I don't see any evidence provided of it being the case. A badly-designed stablecoin? Incompetence? Sure. But the accusation of fraud requires evidence of malice.
        npc12345 4y ago
        I see your point now.
    - braingenious 4y ago
      I’d probably assume somebody looked at “15% interest” as a sales pitch and “losing all of your money” as the actual thing that happened and concluded that it was fraud. What exactly is fraud by your estimation?
      - xvector 4y ago
        There is intent behind fraud.
        kadoban 4y ago
        So if you intend for the con to survive longer than it did you're in the clear? Interesting.
        nrmitchi 4y ago
        The "intent" that is necessary is the intent to benefit from the known misrepresentation, which in this case Stablegains did by obtaining investment from these customers. It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
    - lupire 4y ago
      Source: https://en.m.wikipedia.org/wiki/Do_Kwon https://en.m.wikipedia.org/wiki/Do_Kwon
    - nrmitchi 4y ago
      > Inspired by the possibilities across DeFi, our aim was to go beyond Anchor and to integrate with multiple protocols so that users could have easy access to multiple tools and allocate their assets across all of them based on their judgment of the benefits, costs, and risks of each option. Unfortunately, we didn’t get there in time. Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk. That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future". Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
      - xvector 4y ago
        Do you have a source for the misleading marketing? Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market." This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds. It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie? [1]: http://web.archive.org/web/20220203225905/https://stablegains.com/ http://web.archive.org/web/20220203225905/https://stablegain...
        Jasper_ 4y ago
        From https://stablegains.zendesk.com/hc/en-us/articles/4402687632017-What-is-a-stablecoin-and-which-stablecoins-do-you-use- https://stablegains.zendesk.com/hc/en-us/articles/4402687632... > Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve. > The other stablecoins we may use are, UST (Terra USD) and DAI.
        nrmitchi 4y ago
        I'd have a hard time trusting their current documentation which seems to have been heavily edited since this whole incident began, but frankly the subheader on their main landing page is "Stablegains makes it simple to earn high and stable interest from DeFi lending markets." Market(s). Plural. That at least heavily implies in their marketing that they weren't taking all of their users funds and shoving it into a single asset.
    - Tao332 4y ago
      That's not an ad hominem. The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
      - somewhereoutth 4y ago
        The best explaination Ive seen (from HN I think) was that the Terra/Luna thing was an attempt to tranche the 'asset'. So Luna (junior tranche) has the risk and potential returns, whereas Terra is supposed to be less risky, less returns (Senior tranche). See MBS, CDO, CDO^2, etc.
    - Jasper_ 4y ago
      Anybody promising low-risk, high-return investment is a fraud. After all, why would they have to convince you to invest money if they could just do it themselves?
      - xvector 4y ago
        > After all, why would they have to convince you to invest money if they could just do it themselves? Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
        Jasper_ 4y ago
        If you're so sure of your low-risk, high-reward strategy, get a bank loan. And then once you make more money, get an even bigger bank loan. There are ways of getting capital that don't involve the public's money.
        nrmitchi 4y ago
        This works sometimes, but banks don't want to be overexposed (even if something is very low risk). There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem". This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
    - JumpCrisscross 4y ago
      > Source on the company being fraudulent? See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.) [1] https://news.ycombinator.com/item?id=31462617 https://news.ycombinator.com/item?id=31462617
- peter422 4y ago
  Fwiw a lot of YC companies have had large collapses. For example Homejoy which is a lot bigger than this company. It happens. Startups are risky. Not huge news.
- formerkrogemp 4y ago
  Meh YC backs a lot of scams masquerading as businesses. This period of easy money and wealth concentration has fostered much in the way of misallocation of capital. Y-Combinator exists to make its owners money. Their primary concern is bloody Benjamins, not morality and the public interest.
  - gsibble 4y ago
    As I've said elsewhere, having dealt with them and seen who they invest in, morality does not seem to be an important aspect of YC investments.
- tyrfing 4y ago
  Interestingly, they removed their prominent YC branding very recently after the collapse. Compare: https://twitter.com/stablegains/status/1523874916206059525 https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.c...
1270018080 4y ago
Least corrupt crypto company. Return is directly correlated to risk, so when a black box corporation is promising 15% returns and marketing itself as a “simple and safe” way for its users to benefit from “advances in financial technology.” It's probably not safe, but it is very simple.
- j-pb 4y ago
  Any crypto or web3 startup contains an ad hoc, informally-specified, bug-ridden, slow implementation of "receive_funds.sh > /dev/null".
  - somewhereoutth 4y ago
    Thought you were about to say 'a Ponzi scheme'.
- Edmond 4y ago
  >Return is directly correlated to risk This is really what should be required as the boldface disclaimer on every investment product. "10-15 % guaranteed return" has another name...fraud....even in the case of old-school imperial plunder, there is always the risk your target might fight back.
- nootropicat 4y ago
  >Return is directly correlated to risk This is at least a weak EMH assumption. It's not a law. In crypto sometimes the opposite is true for short to medium periods of time because uninformed people are afraid of 'too high' returns. Best money is made on market inefficiencies like that.
  - lanstin 4y ago
    When I want bright well read people to invest in my scam, I flatter them that they have much better insight than most people and are destined to be ahead of the curve as a result. /s
  - 1270018080 4y ago
Imnimo 4y ago
I guess they didn't get the memo about going default alive.
- unicornmama 4y ago
  Hey these days we're going default ponzi :)
  - deleted 4y ago
    [deleted]
  - braingenious 4y ago
    Seriously! I know this may be an unpopular opinion on this site in particular, but after seeing this I would never even consider raising money from YC. I would not be comfortable having the fate of my business in any way tied to a group of people that are so fucking dumb that they invested in the money version of a perpetual motion machine. Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_
    - pid-1 4y ago
      > Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_ C'mon, let's not forget about NFTs.
      - braingenious 4y ago
        Touché
      - unicornmama 4y ago
        Wait till you hear about "Soulbound" NFTs.
        braingenious 4y ago
        Oh my God. I had not heard about this. I have no words.
Animats 4y ago
TerraUSD Price (UST) $0.05468 So, 95% of the value is gone. Can anyone explain how the fork, airdrop, and other gyrations the Terra/USD promoter is proposing will work, and where any actual money comes from?
- lupire 4y ago
  Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin. Problem is, best they can do is reboot with a Bitcoin-collateralized coin. The whole Terra/Luna/Anchor "algorithmic stablecoin" had been exposed as a fraud or a fantasy, so such smaller fraction of suckers and scammers will buy in to that again, and everyone else might buy in to a Bitcoin backed stablecoin, but there's not much profit in that for Terraform, and the users have no reason to choose it over a more reliably backed coin like Tether or USDC or DAI.
  - josu 4y ago
    >Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin. This is not correct. They used those bitcoins to try to defend the peg. Here you can see the actual treasury: https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-4418-a6ce-b332c57e82e9/page/4YBqC?s=or-T7NeGLew https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44...
    - khuey 4y ago
      > This is not correct. They used those bitcoins to try to defend the peg. My understanding is that its more likely that they were allowing connected insiders to cash out at face value rather than "trying to defend the peg" at the prevailing market rates.
      - josu 4y ago
        No public evidence of that as of now, but it could definitely be true. The interesting thing is that it doesn't really matter, those "insiders" would have dumped the coins in the open market breaking the peg even further. So yeah, maybe LFG could have sold the bitcoins a bit better in the open market, but I don't think that it would have made a difference.
echlebek 4y ago
lol. Even beanie babies were a longer-term investment vehicle than this. I just hope these recent very public and very embarrassing failures are enough to discourage the average person from wasting their money on these scams. I also hope the people behind this get investigated for fraud.
- eternalban 4y ago
  That was funny! > the average person So I'm riding the subway in NYC and there are these adds for yet another one of these crypto related "businesses" and copy iirc goes something like 'stop boring us at parties trying to explain crypto. just invest with us blah blah'. Pretty sure the irony is lost on the target demographic.
- loopdoend 4y ago
  If Ty had come out with a Beanie Baby NFT project this whole thing would’ve come full circle. Do you think they’d have taken off or tanked at the height of the NFT Bubble?
josu 4y ago
Previous discussion: YC W22 Stablegains is being sued for losing $42m in funds from 4878 customers https://news.ycombinator.com/item?id=31431224 https://news.ycombinator.com/item?id=31431224
fakename 4y ago
So the options are to withdraw to USD at 5% value, or transfer the ust to another wallet to qualify for a "potential airdrop" but probably lose the 5% as ust goes to 0?
- Nextgrid 4y ago
  True, however at this point it’s not really up to StableGains - they are doing the right thing here (regardless of their initial - potentially false - advertising) of allowing you to withdraw your holdings and then be at the mercy of the market directly.
Justsignedup 4y ago
people who bet early, made big money. people who came in on the hype lost everything. the definition of pyramid schemes. Oh well. We'll see, it might bounce back as these things do.
- capableweb 4y ago
  Oh, by that definition, even AAPL is a pyramid schema. How about we leave the definition for pyramid scheme where it's already at? > Pyramid scheme: making money based on recruiting an ever-increasing number of "investors." > Oh well. We'll see, it might bounce back as these things do. No, it won't. It won't regain the trust of the community and the project is dead in the water now, no way it'll recover from this.
  - paulryanrogers 4y ago
    AAPL has physical and IP assets which could be sold to make investors whole. While I have big issues with them, they're not in the same ballpark as this 'stable' coin company or pyramid schemes.
    - gruez 4y ago
      >AAPL has physical and IP assets which could be sold to make investors whole While they might have some "physical and IP assets", there isn't nearly enough to "make investors whole" (ie. pay them back). If you invested $100 in apple earlier this year and AAPL somehow needed to be liquidated, you're only getting a fraction of $100 back.
      - Justsignedup 4y ago
        The investor valuation vs actual company value is a different ordeal. In the end, AAPL is building a product, that is wildly popular. Makes a massive profit (and writes it all off, which is another discussion), and spreads its wealth to investors. The products they make produces value in and of themselves. Without the stock, the iPhone, iPad, Macs, cloud services, etc would still be valuable and used. Crypto does not have anything to back itself. It doesn't produce value in and of itself. If suddenly people stop valuing crypto, there would be zero services it produces, unlike an iPhone. If suddenly the AAPL stock drops to 0, they can expose the code for enabling iphones to work and the tech can continue to be used one way or another for an existing an practical utility. That's the difference people are missing. Even a company like Figma, who produces purely digital products, figma, without any investment, is a useful digital tool which serves a purpose to people who use it, without any need for others to invest into it. Theoretically it can be converted to a self-hosted service without any updates, an d still be a useful tool. The income model doesn't impact the utility of the digital tool. Not so with crypto. This is what drives me nuts about crypto enthuseists... they forget the crypto has no value. And even saying "neither does money" but money does serve a practical purpose. It allows for one person selling chickens to convert those chickens to long-term value. And while money is only as valuable as people make it, money is backed by a country's production and reputation, so there is inherent anchoring of money to the world.
Liron 4y ago
Written as if no mistakes were made on their end. Paraphrasing: "We all thought UST and Anchor were a source of stable >10%/yr gains that you could trust for your corporate treasury. That the yield instead turned out to be -99% is quite disappointing, and makes this a natural time for us to bring our service to an end. It's been a pleasure to serve you."
- hinkley 4y ago
  >-99% You know the scene in Office Space when Peter says, “I have eight bosses, Bob.” And then Tall Bob (Dr Cox) leans forward with a surprised look on his face? I don’t think I’ve ever empathized with Bob in that scene. Until just now.
  - Liron 4y ago
    May I suggest another Office Space clip for this situation: https://twitter.com/liron/status/1527376821045473304 https://twitter.com/liron/status/1527376821045473304
- puranjay 4y ago
  Even serious crypto people knew that UST was highly unstable lol How did these guys raise funding? They literally just built a fiat onramp
  - ushakov 4y ago
    > How did these guys raise funding? either the investors didn’t do enough research or they were on it https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-funded-gig-economy-of-securities-violations/ https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-fu...
    - gabereiser 4y ago
      This article is spot on to what I saw in the VC space (I won’t name where). Tons of little copycat crypto “companies” taking VC money for tokens which were collateralized with BTC. I know this article is going after a16z but it’s not just them, it was pretty much everyone.
trixie_ 4y ago
UST, a stable coin not even pretending to be backed by the very thing it was pegged to fails. Unlike USDT, USDC or GUSD, there was a documented plan of attack to take UST down 6 months ago, someone just raised enough capitol to execute it.
- deleted 4y ago
  [deleted]
- djbusby 4y ago
  Can you point to the docs? That seems an interesting read.
  - syncsynchalt 4y ago
    Might be referring to https://twitter.com/freddieraynolds/status/1463960623402913797 https://twitter.com/freddieraynolds/status/14639606234029137...
  - SemanticStrengh 4y ago
    What's interesting is that Do Kwon(the founder) blatantly insulted the researcher at the time.. don't have the link but google it, it's on twitter
- phire 4y ago
  While there was a proposed attack, there is no evidence it (or any other attack) was executed. Which would be weird. Attacks on blockchains usually have detailed analysis within days, the blockchains are public and any evidence would be right there for people to examine. All evidence is that UST simply collapsed on under it's own weight because it's algorithmic nature was never stable. As soon as the price of LUNA started falling, it created a feedback loop which drove the price of LUNA to zero, destroying the very thing backing UST.
  - trixie_ 4y ago
    Yes the attack was a loophole in the algorithm not the blockchain itself.
gloryless 4y ago
It's pathetic that regulators haven't stopped this nonsense. These scams don't even last 6 months anymore, it's a joke
- eatonphil 4y ago
  The shorter the term the harder I would imagine it to be for regulators to act. Governments tend to do things at their own pace.
- unyttigfjelltol 4y ago
  It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.
  - pid-1 4y ago
    IMO letting crypto die by itself is the best way to prove it sucks. If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities. Just let morons fail.
    - IdEntities 4y ago
      Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators. Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
  - xvector 4y ago
    As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.
bmm6o 4y ago
Obviously I'm a little out of the loop, but what is the "attack" they talk about in the new plan? I thought the coin just death spiraled.
- celticninja 4y ago
  The thoughts are that someone borrowed lots of BTC and UST, started selling UST to depeg, then started selling BTC as they tried to regain the peg, the joint selling of BTC lowered the price making it harder, actually impossible,to regain the peg.
  - dwighttk 4y ago
    But wouldn’t that just be mr market, not a particular someone?
- deutz_allis 4y ago
  http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-in-crypto-history http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-... These guys discuss some details (that were known as of this publish date). It closely resembles the 'attack' on GBP in the 90's by a billionaire.
- rspeele 4y ago
  Terra: you can always exchange 1 UST for $1 worth of Luna via this smart contract if you'd like to cash out. Users: OK, don't mind if I do. Terra: help we're under attack.
dataflow 4y ago
> Stablegains is not accepting any new users or any new deposits on our platform. At this time, please DO NOT use your deposit addresses as any funds sent might not be recoverable. It boggles my mind that people don't see that the inability to block/reject payments is a fundamental flaw of cryptocurrency.
- codehalo 4y ago
  Are you saying that someone can't deposit money into random bank account?
  - dataflow 4y ago
    I'm saying people can close their bank accounts.
    - dwighttk 4y ago
      Unless Wells Fargo opens them back up
- wcoenen 4y ago
  Why would there be a "fundamental" reason for an inability to block/reject payments in cryptocurrencies? Ethereum smart contract can already do that. Just exit with an error while processing an incoming payment.
- devit 4y ago
  You can do that with a smart contract if you plan ahead for the possibility that you want to do so.
nrmitchi 4y ago
> While we have informed users that there are no absolute guarantees against risks I'm... uh.... fairly certain this was not the crux of their marketing which severly downplayed the underlying risk. There is also a huge spectrum between "we cannot guarantee that there is 0 risk" (which seems to be what the above sentence is saying), and "there exists a risk that all of your funds disappears in 24 hours". It seems like there is some serious rewriting of history going on here. Question though, do the founders here have any potential criminal liability from this whole situation (including apparently lying about what they were doing with their customers funds)?
- perihelions 4y ago
  This was their old marketing: https://news.ycombinator.com/item?id=31431915 https://news.ycombinator.com/item?id=31431915 -"15% interest. No surprises."
  - deleted 4y ago
    [deleted]
  - nrmitchi 4y ago
    Thank you! I was looking for that image (which I'd seen before) but couldn't find it. Will be interesting to hear the argument "Well technically there were no surprises here, because customers should not be surprised when they lose all their money investing in risky assets. Therefore, technically, we did not lie."
  - TheDudeMan 4y ago
    To be fair, the collapse of an algorithmic stablecoin is no surprise ;)
    - lmohseni 4y ago
      15% interest? No, surprises!
    - puranjay 4y ago
      I can tell you right now that there is absolutely no safe yield in crypto currently that goes beyond 4% on a “safe” stablecoin like USDC. For truly safe (as in, huge value locked, never been hacked), the yield is more like 1.5-2% All the high yield is in algoponzis or new protocols that carry massive protocol risk
sedatk 4y ago
I recommend skimming over the list of blog posts shared over the course of a year about the rise and decline of a crypto startup. It's a great post-mortem: https://medium.com/@kamil.ryszkowski https://medium.com/@kamil.ryszkowski
- kwertyoowiyop 4y ago
  Maybe the real StableGains were the friends we made along the way?
JumpCrisscross 4y ago
If you are in the U.S. and lost money, please write to your state's Attorney General [1]. The company is Stablegains, Inc. and the people to name are Kamil Ryszkowski and Emil Rasmessen, co-founders and, I think, Board members. Copy Ken Paxton, Office of the Attorney General, P. O. Box 12548, Austin, Texas as well as his challenger George P. Bush at P. O. Box 26677, also in Austin. (Stablegains and its founders are in Texas. They are spearheading the criminal complaint.) [1] https://www.usa.gov/state-attorney-general https://www.usa.gov/state-attorney-general
- perihelions 4y ago
  Hopefully the A.G. will recuse himself. He's under indictment for the same crime. https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fraud_felony_indictment https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr...
  - hprotagonist 4y ago
    yeah, Ken Paxton is … let’s go with “not clear and free of scandal”.
    - vkou 4y ago
      Pyramid schemes and political corruption in the US is a very iconic duo (See: Amway is somehow still in the fraud business. The amount of collusion between it and past presidents is, to put simply, sickening.)
  - lolscience 4y ago
    He didn't recuse himself when he investigated his friend/donor and fired whistleblowers. Why would he now?
- chmod775 4y ago
  Creating a public permanent record of having fallen for the latest crypto shitcoin will likely be too embarrassing for some. But then again I'm having trouble relating. Successful "crypto startups" hardly exist, and most of those are selling shovels to suckers. What was the expectation here?
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williamtwild 4y ago
Stablehains sounds like something from a 2am infomercial. I have no idea why people would fall for this garbage.
ryanSrich 4y ago
IMO, every single exchange is at least partially responsible for misleading users. Binance.US and OKCoin specifically marketed UST as a stablecoin that you could earn 20%. Marketing it as a stablecoin is a very clear signal that it has less risk. Yes, users should inform themselves, but exchanges (as well as companies like Stablegains) need to be held accountable.
- anamax 4y ago
  Binance.US didn't list UST until fairly recently. Before then, Binance.US had several other "stable coins", the most popular being Binance USD and Tether. (Binance.US also has a dollar asset which is supposedly FDIC insured.) Binance.US has trading rules that specify things like minimum and maximum price. The minimum price for Binance USD and Tether is something like $0.0001 (and the maximum price is something like $1000.0). IIRC, all of the other stable coins have similar "bounds". UST when introduced was different. Its minimum price was $0.70 (and its maximum price was $1.30). When things went to crap, that minimum price basically froze the market, or rather froze people into their positions. (There were people willing to buy at $0.45, for a while, then $0.17.) FWIW, Binance.US eventually significantly reduced the minimum.
jmyeet 4y ago
What's funny about this is that I can recall discussions here and elsewhere from only a few months ago questioning the "guaranteed" super-high returns. I forget who said this but someone awhile ago said in finance said that if someone is promising you consistent above-market returns it's either a scam or there is unknown or undisclosed risk. And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance". Finance is the way it is for many reasons. There are thousands of years of lessons that have made the system the way it is. I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance. I'm just sitting on the sidelines watching people relearn all the lessons of finance the hard way, some because they think they understand finance because because they understand merkle trees and consensus protocols but really most just want to get rich quick.
- theknocker 4y ago
- vmception 4y ago
  Usually there is an answer, I’m not familiar with the stablegains service but usually there is enough information for you to tell objectively why to use or avoid a service according to your risk profile. There was enough in the terra ecosystem to come to a conclusion of avoiding completely
  - samhw 4y ago
    Consider what we see if there isn't enough information: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons And on a totally separate note, consider what we see in DeFi.
    - pyrale 4y ago
      That's a great point. Even if there were actually legitimate products that could somewhat use cryptocurrency as part of their offering, they would probably get rid of it eventually just to avoid the association with the endless scams that fester in the ecosystem.
civilized 4y ago
Why did YC fund this fairly obvious fraud?
spyder 4y ago
A great related article from last year about the "Inherent fragility of algorithmic stablecoins" it also mentions Terra: http://www.wakeforestlawreview.com/2021/10/built-to-fail-the-inherent-fragility-of-algorithmic-stablecoins/ http://www.wakeforestlawreview.com/2021/10/built-to-fail-the...
wutangisforever 4y ago
not that stable...
cheaprentalyeti 4y ago
I thought there was already a big announcement back towards the middle of the week. (Checks mail spool) OK, Thursday.
honksillet 4y ago
In related news, tether’s market cap dropped another $1B today. Seems like it has been happening in chunks like this every day. At least according to coinmarketcap.com. Down $10B since the Luna collapse, over 10%. Slowly, slowly, then all at once?
HL33tibCe7 4y ago
How on god’s earth did YC invest in this without seeing through the obvious bullshit? YC has some blood on its hands here - their investment lent legitimacy to this scam.
- nikanj 4y ago
  Because obvious bullshit is the investment genre du jour. Why shouldn’t YC, a prominent player, take part in the hot obvious bullshit market?
i_am_proteus 4y ago
Very beautifully, because they have used medium dot com to write their web log, the following text continues to appear at the bottom of the article: >Stablegains.com — 15% APY savings tool. Take control of your financial future. No hidden fees, no minimum balances, no commitment periods.
codedokode 4y ago
After I read about this Terra ecosystem, it looks very suspicious: first, you buy UST tokens, investing real money. You are promised a yield up to 20% (suspicious point 1). Then, you deposit your UST so that other people can lend it. But the terms look weird to me (suspicious point 2): first, the loans are "overcollateralized", so, for example, you need to put down equivalent of $100 to get a loan of $70. Second, the interest rate on the loan is ridiculously high - in the range of 30%. Who would take such a loan? They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens. The support page at Stablegains site says [1]: > They [Digital finance protocols] are more efficient than traditional finance I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year. [1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375569-What-happens-to-my-money-when-I-deposit-it-with-Stablegains-How-is-yield-generated- https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
- codedokode 4y ago
  By the way, here is an idea about new type of coin, that I would call "investcoin". Do you see any potential problems with it? This would be a coin that is backed by stocks. When you buy my investcoin, you can choose any kind of stock from a preapproved list and I will buy them for your money. If you decide to cash out, I will sell stocks of my choice to repay you. The stocks are managed in a public account, so anyone can ensure that the amount of stocks matches the amount of coins. You are guaranteed a share of stocks proportional to amount of coins that you own. Of course, hard work of thinking out a hypothetical cryptocurrency must be rewarded, so I will take a reasonable fee from every transaction involving buying or selling stocks. To make things more interesting, we could manage those stocks by voting of coin holders. Why this is much better than stablecoins: - first, in contrast to existing stablecoins, anyone can easily check that I hold the amount of stocks matching the amount of coins - second, unlike existing stablecoins, the value of my investcoin is going to grow as on average stock markets grow over time - third, the money that you have invested is improving world economy instead of just burning electricity - fourth, you can use this investcoin as a mean of payment - fifth, there will be no promises of ridiculous yield. The stocks are meant to back the value of coin, not to be a source of a significant profit. Looks like a perfect business plan, or am I missing something?
stjohnswarts 4y ago
before they become unstable losses?
CryptoPunk 4y ago
shawabawa3 4y ago
It's very telling that they say they learned of the depeg event on the 10th of May It actually started on the 9th of May. So not only did they negligently invest 100% of funds in a single highly risky project while they marketed that they diversified risk, but they were also asleep at the wheel and missed the opportunity to salvage some of the terra before the depeg had gone too far
richardfey 4y ago
We should normalise signing with the names instead of "Team Stablegain".
FounderBurr 4y ago
But it’s only string…
black_13 4y ago
sizzle 4y ago
Hope there is jail time for investing people’s money into your Anchor protocol ponzi and not telling investors clearly.
mellosouls 4y ago
"Now, as it becomes apparent that UST is not what we all had hoped it would be..."
fakename 4y ago
FYI, for anyone else withdrawing funds: I requested an ACH withdrawal at 5pm pacific on 5.23 It was processed 13 hours later at 645am on 5.24 The conversion rate I received was 0.03850612745 If you view the UST value during that window, it was worth almost twice that rate on average: https://coinmarketcap.com/currencies/terrausd/ https://coinmarketcap.com/currencies/terrausd/ https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844c8f0c4c8e9bdd3e8f2922d0e2bcafd https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844... Just a warning for anyone expecting to get out with even the value of your UST...

324 points by mkeeter 4y ago

axiosgunnar 4y ago

This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?

lupire 4y ago
A fraudulent company going bankrupt because the fraud collapsed.
- xvector 4y ago
  Source on the company being fraudulent? Source on Terra being a fraud? Please provide sources for your ad-hominems.
  - npc12345 4y ago
    (I upvoted you btw, I don't like to censor). I'm a maximalist and even I am not that disingenous.
    - xvector 4y ago
      I simply do not believe it was fraud, and I don't see any evidence provided of it being the case. A badly-designed stablecoin? Incompetence? Sure. But the accusation of fraud requires evidence of malice.
      - npc12345 4y ago
        I see your point now.
  - braingenious 4y ago
    I’d probably assume somebody looked at “15% interest” as a sales pitch and “losing all of your money” as the actual thing that happened and concluded that it was fraud. What exactly is fraud by your estimation?
    - xvector 4y ago
      There is intent behind fraud.
      - kadoban 4y ago
        So if you intend for the con to survive longer than it did you're in the clear? Interesting.
      - nrmitchi 4y ago
        The "intent" that is necessary is the intent to benefit from the known misrepresentation, which in this case Stablegains did by obtaining investment from these customers. It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
  - lupire 4y ago
    Source: https://en.m.wikipedia.org/wiki/Do_Kwon https://en.m.wikipedia.org/wiki/Do_Kwon
  - nrmitchi 4y ago
    > Inspired by the possibilities across DeFi, our aim was to go beyond Anchor and to integrate with multiple protocols so that users could have easy access to multiple tools and allocate their assets across all of them based on their judgment of the benefits, costs, and risks of each option. Unfortunately, we didn’t get there in time. Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk. That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future". Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
    - xvector 4y ago
      Do you have a source for the misleading marketing? Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market." This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds. It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie? [1]: http://web.archive.org/web/20220203225905/https://stablegains.com/ http://web.archive.org/web/20220203225905/https://stablegain...
      - Jasper_ 4y ago
        From https://stablegains.zendesk.com/hc/en-us/articles/4402687632017-What-is-a-stablecoin-and-which-stablecoins-do-you-use- https://stablegains.zendesk.com/hc/en-us/articles/4402687632... > Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve. > The other stablecoins we may use are, UST (Terra USD) and DAI.
      - nrmitchi 4y ago
        I'd have a hard time trusting their current documentation which seems to have been heavily edited since this whole incident began, but frankly the subheader on their main landing page is "Stablegains makes it simple to earn high and stable interest from DeFi lending markets." Market(s). Plural. That at least heavily implies in their marketing that they weren't taking all of their users funds and shoving it into a single asset.
  - Tao332 4y ago
    That's not an ad hominem. The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
    - somewhereoutth 4y ago
      The best explaination Ive seen (from HN I think) was that the Terra/Luna thing was an attempt to tranche the 'asset'. So Luna (junior tranche) has the risk and potential returns, whereas Terra is supposed to be less risky, less returns (Senior tranche). See MBS, CDO, CDO^2, etc.
  - Jasper_ 4y ago
    Anybody promising low-risk, high-return investment is a fraud. After all, why would they have to convince you to invest money if they could just do it themselves?
    - xvector 4y ago
      > After all, why would they have to convince you to invest money if they could just do it themselves? Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
      - Jasper_ 4y ago
        If you're so sure of your low-risk, high-reward strategy, get a bank loan. And then once you make more money, get an even bigger bank loan. There are ways of getting capital that don't involve the public's money.
        nrmitchi 4y ago
        This works sometimes, but banks don't want to be overexposed (even if something is very low risk). There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem". This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
  - JumpCrisscross 4y ago
    > Source on the company being fraudulent? See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.) [1] https://news.ycombinator.com/item?id=31462617 https://news.ycombinator.com/item?id=31462617
peter422 4y ago
Fwiw a lot of YC companies have had large collapses. For example Homejoy which is a lot bigger than this company. It happens. Startups are risky. Not huge news.
formerkrogemp 4y ago
Meh YC backs a lot of scams masquerading as businesses. This period of easy money and wealth concentration has fostered much in the way of misallocation of capital. Y-Combinator exists to make its owners money. Their primary concern is bloody Benjamins, not morality and the public interest.
- gsibble 4y ago
  As I've said elsewhere, having dealt with them and seen who they invest in, morality does not seem to be an important aspect of YC investments.
tyrfing 4y ago
Interestingly, they removed their prominent YC branding very recently after the collapse. Compare: https://twitter.com/stablegains/status/1523874916206059525 https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.c...

1270018080 4y ago

Least corrupt crypto company. Return is directly correlated to risk, so when a black box corporation is promising 15% returns and marketing itself as a “simple and safe” way for its users to benefit from “advances in financial technology.” It's probably not safe, but it is very simple.

j-pb 4y ago
Any crypto or web3 startup contains an ad hoc, informally-specified, bug-ridden, slow implementation of "receive_funds.sh > /dev/null".
- somewhereoutth 4y ago
  Thought you were about to say 'a Ponzi scheme'.
Edmond 4y ago
>Return is directly correlated to risk This is really what should be required as the boldface disclaimer on every investment product. "10-15 % guaranteed return" has another name...fraud....even in the case of old-school imperial plunder, there is always the risk your target might fight back.
nootropicat 4y ago
>Return is directly correlated to risk This is at least a weak EMH assumption. It's not a law. In crypto sometimes the opposite is true for short to medium periods of time because uninformed people are afraid of 'too high' returns. Best money is made on market inefficiencies like that.
- lanstin 4y ago
  When I want bright well read people to invest in my scam, I flatter them that they have much better insight than most people and are destined to be ahead of the curve as a result. /s
- 1270018080 4y ago

Imnimo 4y ago

I guess they didn't get the memo about going default alive.

unicornmama 4y ago
Hey these days we're going default ponzi :)
- deleted 4y ago
  [deleted]
- braingenious 4y ago
  Seriously! I know this may be an unpopular opinion on this site in particular, but after seeing this I would never even consider raising money from YC. I would not be comfortable having the fate of my business in any way tied to a group of people that are so fucking dumb that they invested in the money version of a perpetual motion machine. Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_
  - pid-1 4y ago
    > Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_ C'mon, let's not forget about NFTs.
    - braingenious 4y ago
      Touché
    - unicornmama 4y ago
      Wait till you hear about "Soulbound" NFTs.
      - braingenious 4y ago
        Oh my God. I had not heard about this. I have no words.

Animats 4y ago

TerraUSD Price (UST) $0.05468 So, 95% of the value is gone. Can anyone explain how the fork, airdrop, and other gyrations the Terra/USD promoter is proposing will work, and where any actual money comes from?

lupire 4y ago
Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin. Problem is, best they can do is reboot with a Bitcoin-collateralized coin. The whole Terra/Luna/Anchor "algorithmic stablecoin" had been exposed as a fraud or a fantasy, so such smaller fraction of suckers and scammers will buy in to that again, and everyone else might buy in to a Bitcoin backed stablecoin, but there's not much profit in that for Terraform, and the users have no reason to choose it over a more reliably backed coin like Tether or USDC or DAI.
- josu 4y ago
  >Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin. This is not correct. They used those bitcoins to try to defend the peg. Here you can see the actual treasury: https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-4418-a6ce-b332c57e82e9/page/4YBqC?s=or-T7NeGLew https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44...
  - khuey 4y ago
    > This is not correct. They used those bitcoins to try to defend the peg. My understanding is that its more likely that they were allowing connected insiders to cash out at face value rather than "trying to defend the peg" at the prevailing market rates.
    - josu 4y ago
      No public evidence of that as of now, but it could definitely be true. The interesting thing is that it doesn't really matter, those "insiders" would have dumped the coins in the open market breaking the peg even further. So yeah, maybe LFG could have sold the bitcoins a bit better in the open market, but I don't think that it would have made a difference.

echlebek 4y ago

lol. Even beanie babies were a longer-term investment vehicle than this. I just hope these recent very public and very embarrassing failures are enough to discourage the average person from wasting their money on these scams. I also hope the people behind this get investigated for fraud.

eternalban 4y ago
That was funny! > the average person So I'm riding the subway in NYC and there are these adds for yet another one of these crypto related "businesses" and copy iirc goes something like 'stop boring us at parties trying to explain crypto. just invest with us blah blah'. Pretty sure the irony is lost on the target demographic.
loopdoend 4y ago
If Ty had come out with a Beanie Baby NFT project this whole thing would’ve come full circle. Do you think they’d have taken off or tanked at the height of the NFT Bubble?

josu 4y ago

Previous discussion: YC W22 Stablegains is being sued for losing $42m in funds from 4878 customers https://news.ycombinator.com/item?id=31431224 https://news.ycombinator.com/item?id=31431224

fakename 4y ago

So the options are to withdraw to USD at 5% value, or transfer the ust to another wallet to qualify for a "potential airdrop" but probably lose the 5% as ust goes to 0?

Nextgrid 4y ago
True, however at this point it’s not really up to StableGains - they are doing the right thing here (regardless of their initial - potentially false - advertising) of allowing you to withdraw your holdings and then be at the mercy of the market directly.

Justsignedup 4y ago

people who bet early, made big money. people who came in on the hype lost everything. the definition of pyramid schemes. Oh well. We'll see, it might bounce back as these things do.

capableweb 4y ago
Oh, by that definition, even AAPL is a pyramid schema. How about we leave the definition for pyramid scheme where it's already at? > Pyramid scheme: making money based on recruiting an ever-increasing number of "investors." > Oh well. We'll see, it might bounce back as these things do. No, it won't. It won't regain the trust of the community and the project is dead in the water now, no way it'll recover from this.
- paulryanrogers 4y ago
  AAPL has physical and IP assets which could be sold to make investors whole. While I have big issues with them, they're not in the same ballpark as this 'stable' coin company or pyramid schemes.
  - gruez 4y ago
    >AAPL has physical and IP assets which could be sold to make investors whole While they might have some "physical and IP assets", there isn't nearly enough to "make investors whole" (ie. pay them back). If you invested $100 in apple earlier this year and AAPL somehow needed to be liquidated, you're only getting a fraction of $100 back.
    - Justsignedup 4y ago
      The investor valuation vs actual company value is a different ordeal. In the end, AAPL is building a product, that is wildly popular. Makes a massive profit (and writes it all off, which is another discussion), and spreads its wealth to investors. The products they make produces value in and of themselves. Without the stock, the iPhone, iPad, Macs, cloud services, etc would still be valuable and used. Crypto does not have anything to back itself. It doesn't produce value in and of itself. If suddenly people stop valuing crypto, there would be zero services it produces, unlike an iPhone. If suddenly the AAPL stock drops to 0, they can expose the code for enabling iphones to work and the tech can continue to be used one way or another for an existing an practical utility. That's the difference people are missing. Even a company like Figma, who produces purely digital products, figma, without any investment, is a useful digital tool which serves a purpose to people who use it, without any need for others to invest into it. Theoretically it can be converted to a self-hosted service without any updates, an d still be a useful tool. The income model doesn't impact the utility of the digital tool. Not so with crypto. This is what drives me nuts about crypto enthuseists... they forget the crypto has no value. And even saying "neither does money" but money does serve a practical purpose. It allows for one person selling chickens to convert those chickens to long-term value. And while money is only as valuable as people make it, money is backed by a country's production and reputation, so there is inherent anchoring of money to the world.

Liron 4y ago

Written as if no mistakes were made on their end. Paraphrasing: "We all thought UST and Anchor were a source of stable >10%/yr gains that you could trust for your corporate treasury. That the yield instead turned out to be -99% is quite disappointing, and makes this a natural time for us to bring our service to an end. It's been a pleasure to serve you."

hinkley 4y ago
>-99% You know the scene in Office Space when Peter says, “I have eight bosses, Bob.” And then Tall Bob (Dr Cox) leans forward with a surprised look on his face? I don’t think I’ve ever empathized with Bob in that scene. Until just now.
- Liron 4y ago
  May I suggest another Office Space clip for this situation: https://twitter.com/liron/status/1527376821045473304 https://twitter.com/liron/status/1527376821045473304
puranjay 4y ago
Even serious crypto people knew that UST was highly unstable lol How did these guys raise funding? They literally just built a fiat onramp
- ushakov 4y ago
  > How did these guys raise funding? either the investors didn’t do enough research or they were on it https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-funded-gig-economy-of-securities-violations/ https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-fu...
  - gabereiser 4y ago
    This article is spot on to what I saw in the VC space (I won’t name where). Tons of little copycat crypto “companies” taking VC money for tokens which were collateralized with BTC. I know this article is going after a16z but it’s not just them, it was pretty much everyone.

trixie_ 4y ago

UST, a stable coin not even pretending to be backed by the very thing it was pegged to fails. Unlike USDT, USDC or GUSD, there was a documented plan of attack to take UST down 6 months ago, someone just raised enough capitol to execute it.

deleted 4y ago
[deleted]
djbusby 4y ago
Can you point to the docs? That seems an interesting read.
- syncsynchalt 4y ago
  Might be referring to https://twitter.com/freddieraynolds/status/1463960623402913797 https://twitter.com/freddieraynolds/status/14639606234029137...
- SemanticStrengh 4y ago
  What's interesting is that Do Kwon(the founder) blatantly insulted the researcher at the time.. don't have the link but google it, it's on twitter
phire 4y ago
While there was a proposed attack, there is no evidence it (or any other attack) was executed. Which would be weird. Attacks on blockchains usually have detailed analysis within days, the blockchains are public and any evidence would be right there for people to examine. All evidence is that UST simply collapsed on under it's own weight because it's algorithmic nature was never stable. As soon as the price of LUNA started falling, it created a feedback loop which drove the price of LUNA to zero, destroying the very thing backing UST.
- trixie_ 4y ago
  Yes the attack was a loophole in the algorithm not the blockchain itself.

gloryless 4y ago

It's pathetic that regulators haven't stopped this nonsense. These scams don't even last 6 months anymore, it's a joke

eatonphil 4y ago
The shorter the term the harder I would imagine it to be for regulators to act. Governments tend to do things at their own pace.
unyttigfjelltol 4y ago
It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.
- pid-1 4y ago
  IMO letting crypto die by itself is the best way to prove it sucks. If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities. Just let morons fail.
  - IdEntities 4y ago
    Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators. Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
- xvector 4y ago
  As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.

bmm6o 4y ago

Obviously I'm a little out of the loop, but what is the "attack" they talk about in the new plan? I thought the coin just death spiraled.

celticninja 4y ago
The thoughts are that someone borrowed lots of BTC and UST, started selling UST to depeg, then started selling BTC as they tried to regain the peg, the joint selling of BTC lowered the price making it harder, actually impossible,to regain the peg.
- dwighttk 4y ago
  But wouldn’t that just be mr market, not a particular someone?
deutz_allis 4y ago
http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-in-crypto-history http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-... These guys discuss some details (that were known as of this publish date). It closely resembles the 'attack' on GBP in the 90's by a billionaire.
rspeele 4y ago
Terra: you can always exchange 1 UST for $1 worth of Luna via this smart contract if you'd like to cash out. Users: OK, don't mind if I do. Terra: help we're under attack.

dataflow 4y ago

> Stablegains is not accepting any new users or any new deposits on our platform. At this time, please DO NOT use your deposit addresses as any funds sent might not be recoverable. It boggles my mind that people don't see that the inability to block/reject payments is a fundamental flaw of cryptocurrency.

codehalo 4y ago
Are you saying that someone can't deposit money into random bank account?
- dataflow 4y ago
  I'm saying people can close their bank accounts.
  - dwighttk 4y ago
    Unless Wells Fargo opens them back up
wcoenen 4y ago
Why would there be a "fundamental" reason for an inability to block/reject payments in cryptocurrencies? Ethereum smart contract can already do that. Just exit with an error while processing an incoming payment.
devit 4y ago
You can do that with a smart contract if you plan ahead for the possibility that you want to do so.

nrmitchi 4y ago

> While we have informed users that there are no absolute guarantees against risks I'm... uh.... fairly certain this was not the crux of their marketing which severly downplayed the underlying risk. There is also a huge spectrum between "we cannot guarantee that there is 0 risk" (which seems to be what the above sentence is saying), and "there exists a risk that all of your funds disappears in 24 hours". It seems like there is some serious rewriting of history going on here. Question though, do the founders here have any potential criminal liability from this whole situation (including apparently lying about what they were doing with their customers funds)?

perihelions 4y ago
This was their old marketing: https://news.ycombinator.com/item?id=31431915 https://news.ycombinator.com/item?id=31431915 -"15% interest. No surprises."
- deleted 4y ago
  [deleted]
- nrmitchi 4y ago
  Thank you! I was looking for that image (which I'd seen before) but couldn't find it. Will be interesting to hear the argument "Well technically there were no surprises here, because customers should not be surprised when they lose all their money investing in risky assets. Therefore, technically, we did not lie."
- TheDudeMan 4y ago
  To be fair, the collapse of an algorithmic stablecoin is no surprise ;)
  - lmohseni 4y ago
    15% interest? No, surprises!
  - puranjay 4y ago
    I can tell you right now that there is absolutely no safe yield in crypto currently that goes beyond 4% on a “safe” stablecoin like USDC. For truly safe (as in, huge value locked, never been hacked), the yield is more like 1.5-2% All the high yield is in algoponzis or new protocols that carry massive protocol risk

sedatk 4y ago

I recommend skimming over the list of blog posts shared over the course of a year about the rise and decline of a crypto startup. It's a great post-mortem: https://medium.com/@kamil.ryszkowski https://medium.com/@kamil.ryszkowski

kwertyoowiyop 4y ago
Maybe the real StableGains were the friends we made along the way?

JumpCrisscross 4y ago

If you are in the U.S. and lost money, please write to your state's Attorney General [1]. The company is Stablegains, Inc. and the people to name are Kamil Ryszkowski and Emil Rasmessen, co-founders and, I think, Board members. Copy Ken Paxton, Office of the Attorney General, P. O. Box 12548, Austin, Texas as well as his challenger George P. Bush at P. O. Box 26677, also in Austin. (Stablegains and its founders are in Texas. They are spearheading the criminal complaint.) [1] https://www.usa.gov/state-attorney-general https://www.usa.gov/state-attorney-general

perihelions 4y ago
Hopefully the A.G. will recuse himself. He's under indictment for the same crime. https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fraud_felony_indictment https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr...
- hprotagonist 4y ago
  yeah, Ken Paxton is … let’s go with “not clear and free of scandal”.
  - vkou 4y ago
    Pyramid schemes and political corruption in the US is a very iconic duo (See: Amway is somehow still in the fraud business. The amount of collusion between it and past presidents is, to put simply, sickening.)
- lolscience 4y ago
  He didn't recuse himself when he investigated his friend/donor and fired whistleblowers. Why would he now?
chmod775 4y ago
Creating a public permanent record of having fallen for the latest crypto shitcoin will likely be too embarrassing for some. But then again I'm having trouble relating. Successful "crypto startups" hardly exist, and most of those are selling shovels to suckers. What was the expectation here?

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williamtwild 4y ago

Stablehains sounds like something from a 2am infomercial. I have no idea why people would fall for this garbage.

ryanSrich 4y ago

IMO, every single exchange is at least partially responsible for misleading users. Binance.US and OKCoin specifically marketed UST as a stablecoin that you could earn 20%. Marketing it as a stablecoin is a very clear signal that it has less risk. Yes, users should inform themselves, but exchanges (as well as companies like Stablegains) need to be held accountable.

anamax 4y ago
Binance.US didn't list UST until fairly recently. Before then, Binance.US had several other "stable coins", the most popular being Binance USD and Tether. (Binance.US also has a dollar asset which is supposedly FDIC insured.) Binance.US has trading rules that specify things like minimum and maximum price. The minimum price for Binance USD and Tether is something like $0.0001 (and the maximum price is something like $1000.0). IIRC, all of the other stable coins have similar "bounds". UST when introduced was different. Its minimum price was $0.70 (and its maximum price was $1.30). When things went to crap, that minimum price basically froze the market, or rather froze people into their positions. (There were people willing to buy at $0.45, for a while, then $0.17.) FWIW, Binance.US eventually significantly reduced the minimum.

jmyeet 4y ago

What's funny about this is that I can recall discussions here and elsewhere from only a few months ago questioning the "guaranteed" super-high returns. I forget who said this but someone awhile ago said in finance said that if someone is promising you consistent above-market returns it's either a scam or there is unknown or undisclosed risk. And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance". Finance is the way it is for many reasons. There are thousands of years of lessons that have made the system the way it is. I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance. I'm just sitting on the sidelines watching people relearn all the lessons of finance the hard way, some because they think they understand finance because because they understand merkle trees and consensus protocols but really most just want to get rich quick.

theknocker 4y ago
vmception 4y ago
Usually there is an answer, I’m not familiar with the stablegains service but usually there is enough information for you to tell objectively why to use or avoid a service according to your risk profile. There was enough in the terra ecosystem to come to a conclusion of avoiding completely
- samhw 4y ago
  Consider what we see if there isn't enough information: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons And on a totally separate note, consider what we see in DeFi.
  - pyrale 4y ago
    That's a great point. Even if there were actually legitimate products that could somewhat use cryptocurrency as part of their offering, they would probably get rid of it eventually just to avoid the association with the endless scams that fester in the ecosystem.

civilized 4y ago

Why did YC fund this fairly obvious fraud?

spyder 4y ago

A great related article from last year about the "Inherent fragility of algorithmic stablecoins" it also mentions Terra: http://www.wakeforestlawreview.com/2021/10/built-to-fail-the-inherent-fragility-of-algorithmic-stablecoins/ http://www.wakeforestlawreview.com/2021/10/built-to-fail-the...

wutangisforever 4y ago

not that stable...

cheaprentalyeti 4y ago

I thought there was already a big announcement back towards the middle of the week. (Checks mail spool) OK, Thursday.

honksillet 4y ago

In related news, tether’s market cap dropped another $1B today. Seems like it has been happening in chunks like this every day. At least according to coinmarketcap.com. Down $10B since the Luna collapse, over 10%. Slowly, slowly, then all at once?

HL33tibCe7 4y ago

How on god’s earth did YC invest in this without seeing through the obvious bullshit? YC has some blood on its hands here - their investment lent legitimacy to this scam.

nikanj 4y ago
Because obvious bullshit is the investment genre du jour. Why shouldn’t YC, a prominent player, take part in the hot obvious bullshit market?

i_am_proteus 4y ago

Very beautifully, because they have used medium dot com to write their web log, the following text continues to appear at the bottom of the article: >Stablegains.com — 15% APY savings tool. Take control of your financial future. No hidden fees, no minimum balances, no commitment periods.

codedokode 4y ago

After I read about this Terra ecosystem, it looks very suspicious: first, you buy UST tokens, investing real money. You are promised a yield up to 20% (suspicious point 1). Then, you deposit your UST so that other people can lend it. But the terms look weird to me (suspicious point 2): first, the loans are "overcollateralized", so, for example, you need to put down equivalent of $100 to get a loan of $70. Second, the interest rate on the loan is ridiculously high - in the range of 30%. Who would take such a loan? They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens. The support page at Stablegains site says [1]: > They [Digital finance protocols] are more efficient than traditional finance I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year. [1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375569-What-happens-to-my-money-when-I-deposit-it-with-Stablegains-How-is-yield-generated- https://stablegains.zendesk.com/hc/en-us/articles/4402680375...

codedokode 4y ago
By the way, here is an idea about new type of coin, that I would call "investcoin". Do you see any potential problems with it? This would be a coin that is backed by stocks. When you buy my investcoin, you can choose any kind of stock from a preapproved list and I will buy them for your money. If you decide to cash out, I will sell stocks of my choice to repay you. The stocks are managed in a public account, so anyone can ensure that the amount of stocks matches the amount of coins. You are guaranteed a share of stocks proportional to amount of coins that you own. Of course, hard work of thinking out a hypothetical cryptocurrency must be rewarded, so I will take a reasonable fee from every transaction involving buying or selling stocks. To make things more interesting, we could manage those stocks by voting of coin holders. Why this is much better than stablecoins: - first, in contrast to existing stablecoins, anyone can easily check that I hold the amount of stocks matching the amount of coins - second, unlike existing stablecoins, the value of my investcoin is going to grow as on average stock markets grow over time - third, the money that you have invested is improving world economy instead of just burning electricity - fourth, you can use this investcoin as a mean of payment - fifth, there will be no promises of ridiculous yield. The stocks are meant to back the value of coin, not to be a source of a significant profit. Looks like a perfect business plan, or am I missing something?

stjohnswarts 4y ago

before they become unstable losses?

CryptoPunk 4y ago

shawabawa3 4y ago

It's very telling that they say they learned of the depeg event on the 10th of May It actually started on the 9th of May. So not only did they negligently invest 100% of funds in a single highly risky project while they marketed that they diversified risk, but they were also asleep at the wheel and missed the opportunity to salvage some of the terra before the depeg had gone too far

richardfey 4y ago

We should normalise signing with the names instead of "Team Stablegain".

FounderBurr 4y ago

But it’s only string…

black_13 4y ago

sizzle 4y ago

Hope there is jail time for investing people’s money into your Anchor protocol ponzi and not telling investors clearly.

mellosouls 4y ago

"Now, as it becomes apparent that UST is not what we all had hoped it would be..."

fakename 4y ago

FYI, for anyone else withdrawing funds: I requested an ACH withdrawal at 5pm pacific on 5.23 It was processed 13 hours later at 645am on 5.24 The conversion rate I received was 0.03850612745 If you view the UST value during that window, it was worth almost twice that rate on average: https://coinmarketcap.com/currencies/terrausd/ https://coinmarketcap.com/currencies/terrausd/ https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844c8f0c4c8e9bdd3e8f2922d0e2bcafd https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844... Just a warning for anyone expecting to get out with even the value of your UST...