Just when you thought hearing about losses from UST/LUNA was over...
Stablegains Lawsuit
Stablegains is a platform that would allow customers to deposit crypto to earn 15% APY on their assets. The idea was to allow users to deposit assets and get the benefits of DeFi without all the things that come along with it. DeFi can be intimidating and hard to understand for the average user, so Stablegains was there to save them the headache of learning how to do it themselves. They advertised daily gains and 15% APY with the ability to deposit and withdraw freely via Circle...
What they didn't tell their customers was that they were depositing their assets into Anchor via UST. We're all familiar at this point with what happened in the Terra world with LUNA and UST. If not, basically the entire system imploded sending LUNA to $0.00010650 and the stable coin supposedly pegged to $1 called UST to $0.055.
There's a lot of speculation and allegations around that whole situation, but nothing has been confirmed aside from the fact that the founder Do Kwon is facing $78 million in fees for tax evasion. He's still trying to save the platform by forking it, but it won't work. Sorry bro. Terra is dead. Just let it rest.
So they were taking user's funds via deposits in USD and USDC... Paying them a stable gain of 15% APY based on their deposit... Depositing those funds into Anchor earning 20% APY on UST and pocketing the difference. This was the whole business model, and it was ingenious. It was fool proof, until it wasn't. When UST collapsed, they were 100% fucked.
At the time of the collapse, they were holding 47,611,058 UST in Anchor from nearly 5,000 different customers... Before the implosion of UST and the crash from $1 to 5 cents, this was worth over $47 Million and was earning 20%. Even after paying the 15% APY to their customers in daily gains, they were pocketing 5% of the compounded interest which was plenty free money for them. They were making shit tons of money off their poor customers that had no idea what was going on.
The value of their holdings from customer deposits crashed from $47 million to about $2 million nearly overnight. Obviously that was devastating to them as a business, but they can't really do anything about their customers' money. They even advertised on the front page of the website that their customers' assets would "stay stable regardless of market conditions". Big oof!
They are really trying to keep the trust of their customers by referring to this as an "ongoing event'. We all know that the UST depegging situation is over. It's dead. There's literally no chance that LUNA will recover which means that UST will never recover. They're really trying to cover their asses by putting all of the blame on Anchor, saying that it's because Anchor only supports UST.
Looking at the FAQ page for Stablegains is even more sad. They explain that withdrawing USD during the "UST depegging" will only get the users whatever the market value is of UST. Literally just letting them know that they won't be getting the full dollar value back that they deposited. Don't worry though, they offer you the ability to withdraw your UST instead of converting to USD... LOL
It's really disgusting that they did this with customer's funds. Now they're facing a huge class-action lawsuit for losing over $40 million in customers' funds. They claim to be registered as a Money Service Business with the FinCEN too so they are really in deep shit with this. There's literally no chance that the value of their customers' funds will return. They're better off filing bankruptcy or trying to win the lawsuit.
This is what happens when you trust a centralized service to manage your funds. They were essentially operating as a bank and gambling with the assets. RIP to their customers' funds and I hope the FinCEN is able to get customers at least some of their money back.
Thanks for reading! Much love.
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That's crazy and the fall out keeps rolling. Thanks for sharing really interesting.
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It's really sad but I feel it's important that we keep highlighting shit like this so these criminals get taken down.
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But who get all this coins in first two days when all this fall was start ??? 👌👌👌🍷🤔 it is not small quantity .. and it must be easy to see where it going and sit.
yep, the blockchain doesn't lie.
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On your second photo "Stablecoin risks and how we mitigate them" the greatest irony is the footnote which says "was this article helpful?"
It made me laugh.
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That was the biggest shouting lie. They absolutely deserve the lawsuit for scamming their customers.
Hopefully they will not win the lawsuit. There should be justice. Of course this will still not give back the lost money to the customers, but a scammer company should not win a lawsuit.
Fortunately/luckily I have nothing to do with Stablegains, but this company is a huge shame to the entire cryptocurrency world and to stablecoins.
They won't win. They'll try to find a way out though.
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They are already "out" (of business). The correct/proper move would be to declare/admit bankruptcy.
Yeah, that was what I was thinking. That at least saves them money they've already lost.
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I think there will probably be more of these lawsuits because I am sure they are not the only group of people pocketing the difference.
Posted Using LeoFinance Beta
Definitely not the only ones.
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Now the authorities will come and say, 'See? This is why we want to regulate crypto'. And I think regulation could be good as far as both the parties agree with it.
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Meh, that could be said about a lot of things. People are always going to do things like this. Humans are the worst.
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In any case, the human factor is the weakest link, especially when it is a long chain of interconnected elements. one collapses, pulling others along with it. As we have seen, even in the case of the Dhedge coin, the admin left, the coin collapsed, an unforeseen situation could hit me hard, I was going to buy ten thousand coins, fortunately, I found out about the collapse in time.
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Wow, I had no idea about this one. Is that the Hive Engine token?
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Yes, this coin was familiar to me for a long time, without any doubt I bought 1000 coins and planned to buy another 10,000. But, for some reason, I wanted to see the update of the coin, I did not immediately find information about what a person was. who was responsible for the software left the project and everything went by itself, the bot stopped issuing coins and other troubles. I had to urgently dump all the coins that are associated with BRO, I don’t want to take any more risks even if they skyrocket.
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Wow, that's crazy! I think I have some of these, time to dump.
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It’s better to read all their updates, this is just my attitude, I don’t want to get up in a puddle twice). My answer to you is not a recommendation to sell coins cheaply)
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I appreciate that.
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From now on I will be more careful with my stories, lol, I will warn that this is not an indication to action)
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That’s some wild information, tried avoiding volatility risk but invested into the wrong stablecoin. So sorry for the company.
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Yep, just shows that you need to be transparent about what you're doing with customer funds.
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Yay! 🤗
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Big ouch.
Glad to be on Hive ;<)
Yep! One of the safest places to be in my opinion.
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