US SEC chairman Gary Gensler criticized stablecoins and digital asset exchanges for trading against their customers. This criticism comes at a low point for the crypto market, which is currently going through a difficult period. The headline of the dip was Terra Labs, which saw its stablecoin take a massive hit from a 90% drop.

SEC looking for the last smile

Gary Gensler launched a scathing attack on digital asset exchanges and stablecoins, as reported by Bloomberg. He said,

“Crypto has many of those challenges: platforms that are ahead of their customers. In fact, they often trade against their customers because they are marketing their customers.”

He also pointed out how major stablecoins namely Tether, USD Coin and Binance USD are affiliated with exchanges. SEC chairman further opined,

“I don’t think it’s a coincidence. Each of the big three has been established by the trading platforms to facilitate trading on those platforms and potentially avoid AML (anti-money laundering) and KYC (know your customer).”

Concerns about stablecoins were high after UST lost its peg to the dollar in recent days. It is pointed out that this is disastrous as it could potentially lead to a BTC crash. Senator Mark Warner insisted on the need for “some kind of framework” to assure investors of the stability of stablecoins. He said in an interview that,

“Frankly, maybe this market disruption could take some of the air off this highly overheated balloon.”

Terra Labs CEO Launches Rescue Operation

Mudit Gupta, Polygon’s Chief Informational Security Officer, compared this crash to one of the biggest financial crashes in recent years. He said,

“This is very similar to the situation of Lehman Brothers in 2008 which caused a financial crisis. It didn’t matter if other companies were doing well or not. Everything was disappointing.”

Nevertheless, Do Kwon, CEO of Terra Labs, released the recovery plan on his Twitter feed. After finally breaking the silence on the debacle, Do Kwon suggested tweaking two parameters in Terra’s codebase. These stats, namely BasePool and PoolRecoveryBlock, will allow for a possible recovery of the stablecoin for part of the proposal 1164.

Furthermore, Do Kwon urged to accelerate token burning by increasing the protocol’s coin capacity from $293 million to $1.2 billion. He added that

“The only way forward will be to absorb the stablecoin stock that wants to shut down before $UST can start to rebound. There is no way around it.”

This post Gensler attacks USDT, USDC, BUSD as Do Kwon takes his ‘razor focus’ to deliver

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