6 ms·

I know it comes up every time something like this happens, but who _are_ these retail investors who are left holding the bag? Individuals who thought it was a g

by nkrisc 4y ago

I know it comes up every time something like this happens, but who _are_ these retail investors who are left holding the bag? Individuals who thought it was a good idea? People who have money in a fund and this was part of their “crypto” diversification? I understand why the whales get in: they’re sophisticated enough and rich enough to multiply their money in an obvious Ponzi scheme, but why would anyone else get involved?

palcu 4y ago
Rest of world has a really good article about people from emerging markets that chose Luna because their home currency is unstable. https://restofworld.org/2022/argentina-nigeria-terra-crash/ https://restofworld.org/2022/argentina-nigeria-terra-crash/
- lupire 4y ago
  That's just a fancy way of saying "dumb people got scammed"
CTDOCodebases 4y ago
I know one. He learnt about bitcoin in 2017 and bought one bitcoin at the top. He forgot he had it until bitcoin broke 20K in 2021. From there using simple trading strategies he managed to trade this one bitcoin into five before exiting after the price hit the most recent all time high. He got out at 50K exiting into USDT. While waiting for a re-entry into bitcoin he found out about staking stable coins. He didn't understand how the UST peg was kept but like a lot of complex things in life he didn't question it. He knew the yield was abnormally high but chalked that up to the investors pouring money into the project trying to gain traction. He expected the yield to be lowered over time to normal market levels as investor money ran out and adoption occured. He staked 250K and was earning approx $950 a week in yield. I spoke to him after the peg broke (0.33c) and he was confident that the peg was going to stabilise. I told him I didn't think that was going to occur and to exit on the bounce at a loss he was comfortable with. Suffice to say he ended up exiting UST at 0.10c. To answer your question people get involved because they see opportunity, have a high risk tolerance and/or just don't understand the risks.
- SergeAx 4y ago
  Or just have free money to play around with.
  - CTDOCodebases 4y ago
    True. Some people just don't value the money to begin with so they honestly don't care if they lose it.
Tenoke 4y ago
I had invested in a project built on Luna - MIR as I believe synthetic assets on chain have future. Later I added in a bit of LUNA as the chain was getting a lot of projects and I like to be diversified in smartchains projects. I never paid attention to UST and my LUNA holding was a tiny part of my portfolio though.
- haasted 4y ago
  How has MIR fared since the crash?
  - Tenoke 4y ago
    Worse but it has somewhat recovered. Projects like that can move to another chain if needed and are only indirectly impacted though.
deleted 4y ago
[deleted]
hglix 4y ago
Conservatives are told by the Daily Wire that bitcoin is the new gold. Rich teenagers are told by chess streamers that bitcoin is for the intelligent. Your taxi driver is told by a Hollywood celebrity to go all in. There are a lot of suckers to exploit.
whywhywhywhy 4y ago
> but why would anyone else get involved? What other options are there for people? House prices are insane, inflation is eating your savings, salaries are stagnant. People are gonna scramble to whatever they thing is their way out even if it’s obvious scams at times.
fortran77 4y ago
And the article points out that the big players were able to squeeze big profits out of this before the inevitable crash: > Many of the large firms that invested in and marketed this coin were able to exit before the crash occurred, escaping with massive profits. Strangely, some of these whales felt the need to share this in their comments following the crash. Pantera Capital CIO Joey Krug admitted that they had sold 80% of their Luna position before the crash. Furthermore, Pantera Capital partner, Paul Veradittakit, seemingly bragged that they had turned their $1.7 million dollar Luna investment into around $170 million dollars. So the bag holders/true believers directly funded the market makers and manipulators.
blamazon 4y ago
Line go up and FOMO. This scheme was advertising the potential of meaningful gains (5-20% per year) for simply parking your money in it. And it was a 'stablecoin', that sounds low-risk. High rewards, low risk, doesn't everyone want that? Anyone who had money and wanted more money and wasn't well informed of the true risk was susceptible to putting large sums of money into it. Think about all the crypto ads shown during the last Super Bowl. Think of all the people who watched those ads and decided to try out crypto speculation. Some percentage of those people were bag holders here.
- ghaff 4y ago
  FOMO is part of it I think. They hear about people making life-altering amounts of money and they want to get in on it. At least some of them probably also figure this is their one shot at a comfortable living.
- DebtDeflation 4y ago
  The number of crypto social media influencers posting about "20% GUARANTEED annual yields with Stablecoins!" a few months back was ridiculous. Where were the regulators? Every investment advertisement in the real (non-crypto) world includes a "Past performance is no guarantee of future returns. Investing involves risk, including possible loss of principal." disclaimer, but apparently rules don't apply to crypto. It's hard to feel sorry for all of the "hodling to the moon in my Lambo" people but at the same time the government is asleep at the switch here.
  - IdEntities 4y ago
    The government is going to be happy if a large number of people are sucked into Ponzi schemes which blow up and cause harm to the broader reputation of cryptocurrencies as such.
    - pavlov 4y ago
      To the libertarians even their own failures are always a result of government conspiracy.
gnopgnip 4y ago
Luna-ust was paying ~40% in yield. People thought it was safer than it really was because of how much others had invested, because of the technology. Because of ads, sometimes from people they trust
pavlov 4y ago
Crypto companies had several ads in the Super Bowl this year. Ordinary people were sucked in by promises of foolproof returns and delirious web3-metaverse jargon that sounded like something important is happening. The Terra/Luna token was created by a South Korean company. These quotes are from reporting by the Financial Times: “As the losses mounted, South Korean press reports linked the crash with a local surge in online searches for Seoul’s Mapo Bridge, a reputed suicide spot. Local police announced increased patrols around the bridge in response.” ‘“Do Kwon was like a successful cult leader,” said Donghwan Kim of Blitz Labs, a Seoul-based crypto advisory firm. “But now he’s the most hated man in Korea.”’ Venture capital lended an aura of legitimacy to the cult-like operation: “Individual investors had been attracted by a scheme in which clients could lend out their terra for a 20 per cent yield. But hundreds of millions of dollars of investment in Terraform Labs came from venture capital firms including Galaxy Digital, whose chief executive Mike Novogratz would later acquire a luna tattoo on his left shoulder.” ‘“Commitments from some of the most respected funds is a testament to the shared vision of bringing decentralised finance to the masses,” Kwon declared in July last year.’ ‘“About Won14tn-Won15tn was deposited in just one year after they began to offer the 20 per cent yield,” Kwon’s former colleague said. “Retail investors were lured by the high yield, while venture capital was attracted by the coins’ fast growth. The speed of growth was unsustainable.”’ 15 trillion won is 12 billion USD. The scale of the scam was massive, and it’s possibly only the first crypto domino to fall.
- astoor 4y ago
  If these scams and frauds are being fueled and legitimised by the venture capitalists, and the venture capitalists are US regulated, shouldn't the regulators be going after the venture capitalists? Even a few seconds of amateur due diligence (e.g. the time it takes to read "20% guaranteed annual return with zero risk") would have set off alarm bells, so they must have known they were aiding and abetting criminal activity.
  - pavlov 4y ago
    US laws are designed for investor protection, and VCs are investors. Probably it would be very hard to prove that they were co-conspirators.
andreareina 4y ago
I know plenty of people who've been taken in by the rhetoric. In the end "look at all these people who have made life-changing amounts of money by just putting some money into this thing" is very effective at disengaging people's rational processes.
Scott_Sanderson 4y ago
I was a holder of UST in anchor protocol. I was aware the peg was shaky, but my yield farm output UST so I went with it.
puranjay 4y ago
Far too many people who simply didn't understand the mechanism and were told this was a "safe" investment since it was one of the top 20 coins. The number of big name investment gurus who shilled this on Twitter was insane. Mike Novogratz even got a tattoo of Luna.
raesene9 4y ago
There's a WSJ piece here https://www.wsj.com/articles/terrausd-crash-led-to-vanished-savings-shattered-dreams-11653649201?mod=hp_lead_pos10 https://www.wsj.com/articles/terrausd-crash-led-to-vanished-... which talks to a couple of the affected investors. From the article it seems that people got persuaded by the seeming respectability combined with the promise of great returns. One of the people they spoke to invested via Stablegains. They also mention how people had taken online investment courses which led to them getting into crypto trading.
- nkrisc 4y ago
  > They also mention how people had taken online investment courses which led to them getting into crypto trading. That’s the most interesting part, almost sounds like a disguised sales funnel for crypto, because if they’d learned anything about investing from it they might realize much of it seems to good to be true. Certainly you can make good money off crypto if you’re smart enough, many people do. But most people don’t it seems.
  - ghaff 4y ago
    >Certainly you can make good money off crypto if you’re smart enough Luck almost certainly has a lot more to do with it than smarts. I can make lots of money playing the lottery too.
    - fortran77 4y ago
      > Certainly you can make good money off crypto if you’re smart enough, many people do. But most people don’t it seems. My thought too. People made money trading baseball cards and beanie babies, too. Doesn't mean they were necessarily smart, or that this was a sustainable way to get income.
  - tsol 4y ago
    I feel with investing classes it often works the other way around-- people hear about all these folks getting rich off of crypto or the stock market, feel it sounds like something they can do, and then take an investing class to figure out how to do that. So a lot of people already buy into crypto just based on the fact that everyone has heard stories about crypto millionaires, plus if that's not enough-- there are ads for them at every sports game and Goldman Sachs is invested. At that point it'll take a lot to convince anyone in one of those classes that they're better off investing responsibly
nathias 4y ago
I'm a retail investor that currently holds all my money in a stablecoin with 1400% yearly return. AMA
- leehuffman 4y ago
  Nah we good.
  - nathias 4y ago
    so why are you asking then?
    - blangk 4y ago
      I don't see a question mark.
- qsi 4y ago
  A stablecoin with 1400% yearly return is ipso facto anything but stable. It purports to return 1400%. Exponentially not viable seems more apt. Or just shortcut it and call it a scam outright.
- fshbbdssbbgdd 4y ago
  Is there a way to short it?
- nkrisc 4y ago
  Has it been a year yet?
- IdEntities 4y ago
  How do you believe the coin is able to pay these sorts of yields without Ponzi or Ponzi-like mechanisms?
  - nathias 4y ago
    All monetary mechanics are ponzi-like, that isn't a problem, the problem is if people scam or if the experimental game theory is faulty.

by nkrisc 4y ago

palcu 4y ago

Rest of world has a really good article about people from emerging markets that chose Luna because their home currency is unstable. https://restofworld.org/2022/argentina-nigeria-terra-crash/ https://restofworld.org/2022/argentina-nigeria-terra-crash/

lupire 4y ago
That's just a fancy way of saying "dumb people got scammed"

CTDOCodebases 4y ago

I know one. He learnt about bitcoin in 2017 and bought one bitcoin at the top. He forgot he had it until bitcoin broke 20K in 2021. From there using simple trading strategies he managed to trade this one bitcoin into five before exiting after the price hit the most recent all time high. He got out at 50K exiting into USDT. While waiting for a re-entry into bitcoin he found out about staking stable coins. He didn't understand how the UST peg was kept but like a lot of complex things in life he didn't question it. He knew the yield was abnormally high but chalked that up to the investors pouring money into the project trying to gain traction. He expected the yield to be lowered over time to normal market levels as investor money ran out and adoption occured. He staked 250K and was earning approx $950 a week in yield. I spoke to him after the peg broke (0.33c) and he was confident that the peg was going to stabilise. I told him I didn't think that was going to occur and to exit on the bounce at a loss he was comfortable with. Suffice to say he ended up exiting UST at 0.10c. To answer your question people get involved because they see opportunity, have a high risk tolerance and/or just don't understand the risks.

SergeAx 4y ago
Or just have free money to play around with.
- CTDOCodebases 4y ago
  True. Some people just don't value the money to begin with so they honestly don't care if they lose it.

Tenoke 4y ago

I had invested in a project built on Luna - MIR as I believe synthetic assets on chain have future. Later I added in a bit of LUNA as the chain was getting a lot of projects and I like to be diversified in smartchains projects. I never paid attention to UST and my LUNA holding was a tiny part of my portfolio though.

haasted 4y ago
How has MIR fared since the crash?
- Tenoke 4y ago
  Worse but it has somewhat recovered. Projects like that can move to another chain if needed and are only indirectly impacted though.

deleted 4y ago

[deleted]

hglix 4y ago

Conservatives are told by the Daily Wire that bitcoin is the new gold. Rich teenagers are told by chess streamers that bitcoin is for the intelligent. Your taxi driver is told by a Hollywood celebrity to go all in. There are a lot of suckers to exploit.

whywhywhywhy 4y ago

> but why would anyone else get involved? What other options are there for people? House prices are insane, inflation is eating your savings, salaries are stagnant. People are gonna scramble to whatever they thing is their way out even if it’s obvious scams at times.

fortran77 4y ago

And the article points out that the big players were able to squeeze big profits out of this before the inevitable crash: > Many of the large firms that invested in and marketed this coin were able to exit before the crash occurred, escaping with massive profits. Strangely, some of these whales felt the need to share this in their comments following the crash. Pantera Capital CIO Joey Krug admitted that they had sold 80% of their Luna position before the crash. Furthermore, Pantera Capital partner, Paul Veradittakit, seemingly bragged that they had turned their $1.7 million dollar Luna investment into around $170 million dollars. So the bag holders/true believers directly funded the market makers and manipulators.

blamazon 4y ago

Line go up and FOMO. This scheme was advertising the potential of meaningful gains (5-20% per year) for simply parking your money in it. And it was a 'stablecoin', that sounds low-risk. High rewards, low risk, doesn't everyone want that? Anyone who had money and wanted more money and wasn't well informed of the true risk was susceptible to putting large sums of money into it. Think about all the crypto ads shown during the last Super Bowl. Think of all the people who watched those ads and decided to try out crypto speculation. Some percentage of those people were bag holders here.

ghaff 4y ago
FOMO is part of it I think. They hear about people making life-altering amounts of money and they want to get in on it. At least some of them probably also figure this is their one shot at a comfortable living.
DebtDeflation 4y ago
The number of crypto social media influencers posting about "20% GUARANTEED annual yields with Stablecoins!" a few months back was ridiculous. Where were the regulators? Every investment advertisement in the real (non-crypto) world includes a "Past performance is no guarantee of future returns. Investing involves risk, including possible loss of principal." disclaimer, but apparently rules don't apply to crypto. It's hard to feel sorry for all of the "hodling to the moon in my Lambo" people but at the same time the government is asleep at the switch here.
- IdEntities 4y ago
  The government is going to be happy if a large number of people are sucked into Ponzi schemes which blow up and cause harm to the broader reputation of cryptocurrencies as such.
  - pavlov 4y ago
    To the libertarians even their own failures are always a result of government conspiracy.

gnopgnip 4y ago

Luna-ust was paying ~40% in yield. People thought it was safer than it really was because of how much others had invested, because of the technology. Because of ads, sometimes from people they trust

pavlov 4y ago

Crypto companies had several ads in the Super Bowl this year. Ordinary people were sucked in by promises of foolproof returns and delirious web3-metaverse jargon that sounded like something important is happening. The Terra/Luna token was created by a South Korean company. These quotes are from reporting by the Financial Times: “As the losses mounted, South Korean press reports linked the crash with a local surge in online searches for Seoul’s Mapo Bridge, a reputed suicide spot. Local police announced increased patrols around the bridge in response.” ‘“Do Kwon was like a successful cult leader,” said Donghwan Kim of Blitz Labs, a Seoul-based crypto advisory firm. “But now he’s the most hated man in Korea.”’ Venture capital lended an aura of legitimacy to the cult-like operation: “Individual investors had been attracted by a scheme in which clients could lend out their terra for a 20 per cent yield. But hundreds of millions of dollars of investment in Terraform Labs came from venture capital firms including Galaxy Digital, whose chief executive Mike Novogratz would later acquire a luna tattoo on his left shoulder.” ‘“Commitments from some of the most respected funds is a testament to the shared vision of bringing decentralised finance to the masses,” Kwon declared in July last year.’ ‘“About Won14tn-Won15tn was deposited in just one year after they began to offer the 20 per cent yield,” Kwon’s former colleague said. “Retail investors were lured by the high yield, while venture capital was attracted by the coins’ fast growth. The speed of growth was unsustainable.”’ 15 trillion won is 12 billion USD. The scale of the scam was massive, and it’s possibly only the first crypto domino to fall.

astoor 4y ago
If these scams and frauds are being fueled and legitimised by the venture capitalists, and the venture capitalists are US regulated, shouldn't the regulators be going after the venture capitalists? Even a few seconds of amateur due diligence (e.g. the time it takes to read "20% guaranteed annual return with zero risk") would have set off alarm bells, so they must have known they were aiding and abetting criminal activity.
- pavlov 4y ago
  US laws are designed for investor protection, and VCs are investors. Probably it would be very hard to prove that they were co-conspirators.

andreareina 4y ago

I know plenty of people who've been taken in by the rhetoric. In the end "look at all these people who have made life-changing amounts of money by just putting some money into this thing" is very effective at disengaging people's rational processes.

Scott_Sanderson 4y ago

I was a holder of UST in anchor protocol. I was aware the peg was shaky, but my yield farm output UST so I went with it.

puranjay 4y ago

Far too many people who simply didn't understand the mechanism and were told this was a "safe" investment since it was one of the top 20 coins. The number of big name investment gurus who shilled this on Twitter was insane. Mike Novogratz even got a tattoo of Luna.

raesene9 4y ago

There's a WSJ piece here https://www.wsj.com/articles/terrausd-crash-led-to-vanished-savings-shattered-dreams-11653649201?mod=hp_lead_pos10 https://www.wsj.com/articles/terrausd-crash-led-to-vanished-... which talks to a couple of the affected investors. From the article it seems that people got persuaded by the seeming respectability combined with the promise of great returns. One of the people they spoke to invested via Stablegains. They also mention how people had taken online investment courses which led to them getting into crypto trading.

nkrisc 4y ago
> They also mention how people had taken online investment courses which led to them getting into crypto trading. That’s the most interesting part, almost sounds like a disguised sales funnel for crypto, because if they’d learned anything about investing from it they might realize much of it seems to good to be true. Certainly you can make good money off crypto if you’re smart enough, many people do. But most people don’t it seems.
- ghaff 4y ago
  >Certainly you can make good money off crypto if you’re smart enough Luck almost certainly has a lot more to do with it than smarts. I can make lots of money playing the lottery too.
  - fortran77 4y ago
    > Certainly you can make good money off crypto if you’re smart enough, many people do. But most people don’t it seems. My thought too. People made money trading baseball cards and beanie babies, too. Doesn't mean they were necessarily smart, or that this was a sustainable way to get income.
- tsol 4y ago
  I feel with investing classes it often works the other way around-- people hear about all these folks getting rich off of crypto or the stock market, feel it sounds like something they can do, and then take an investing class to figure out how to do that. So a lot of people already buy into crypto just based on the fact that everyone has heard stories about crypto millionaires, plus if that's not enough-- there are ads for them at every sports game and Goldman Sachs is invested. At that point it'll take a lot to convince anyone in one of those classes that they're better off investing responsibly

nathias 4y ago

I'm a retail investor that currently holds all my money in a stablecoin with 1400% yearly return. AMA

leehuffman 4y ago
Nah we good.
- nathias 4y ago
  so why are you asking then?
  - blangk 4y ago
    I don't see a question mark.
qsi 4y ago
A stablecoin with 1400% yearly return is ipso facto anything but stable. It purports to return 1400%. Exponentially not viable seems more apt. Or just shortcut it and call it a scam outright.
fshbbdssbbgdd 4y ago
Is there a way to short it?
nkrisc 4y ago
Has it been a year yet?
IdEntities 4y ago
How do you believe the coin is able to pay these sorts of yields without Ponzi or Ponzi-like mechanisms?
- nathias 4y ago
  All monetary mechanics are ponzi-like, that isn't a problem, the problem is if people scam or if the experimental game theory is faulty.