Crypto startup StableGains, which offered clients access to DeFi proceeds, could be in trouble after pouring a large chunk of their money into Terra.
The company offered depositors a 15% return by committing their money to Terra’s Anchor Protocol. This was done by converting customers’ money into UST.
But after UST crashed, the company is now struggling to refund its customers’ money. Reports suggest the company has lost as much as… $42 million from over 4000 customers† It now offers withdrawals in USD and USDC, denominated in the recent peg of UST, which is currently below $0.1.
Stablegains no longer accepting new customers, deposits in doubt
The startup’s website now states that it is not currently accepting new clients. A Twitter thread on its official page also suggests that the availability of its customer assets depends on Terra and Anchor Protocol remaining active.
Twitter user @FatManTerra noted that this is likely due to the company putting most of their clients’ money into Anchor, which was ground zero of the UST crash.
The company now appears to be requiring its users to sign a waiver releasing them from liability before they can withdraw their funds. There is a lot of attention for the move on Twitter.
Several users are now requesting intervention from the Securities and Exchange Commission in the matter.
Ok, so *this* is what SEC should be looking at
-DeFi App Curve Finance said on Twitter
Stablegains is far from Terra’s only victim. Recent data showed that L-1 blockchains recorded heavy losses after Terra’s crash.
SEC plans stricter crypto regulations after Terra
Terra’s crash has sparked the ire of financial regulators in several countries. On Wednesday, SEC Chain Gary Gensler outlined stricter rules for cryptocurrencies in the wake of the crash.
In an address, Gensler said the initial coin offerings will be subject to more registration to be more accountable. The move will also focus on protecting investors.
At the same time, South Korea is also considering tighter crypto regulations after widespread investor losses from the Terra debacle.
With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can play him video games or watch Seinfeld reruns. You can reach him at [email protected]
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication is not responsible for your personal financial loss.
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