Activist investor Bill Ackman weighed in on the recent Terra crisis, calling the protocol a crypto version of a pyramid scheme.
Ackman’s comments come in wake of the Terra blockchain losing most of its value in the span of a few days, as the de-pegging of its UST stablecoin cause a massive bank run.
The fact that UST offered a 20% return, with no fundamental business backing its value, is the most telltale sign of a pyramid scheme, Ackman said late-Tuesday. The protocol collapsed once LUNA suppliers surpassed buyers.
Ackman is the founder of Pershing Square Capital, a hedge fund. His boisterous and highly involved investment style has earned him the tag of an “activist investor.”
Ackman praises blockchain, calls for more self-regulation
In a Twitter thread, the Pershing Square founder praised blockchain as being a “brilliant technology,” but added that projects like Terra gave the space a bad name. To Ackman, the digitization of LUNA and the hype around the crypto market were the key reasons behind the platform’s popularity.
He called for more self-regulation by the crypto industry, especially towards businesses that have no underlying businesses backing their tokens.
The crypto industry should self-regulate away other crypto projects with no underlying business models before crippling regulation shuts down the good and the bad. Hyping tokens that are not supported by businesses that create value will destroy the entire crypto industry.
Fears of increased crypto regulation have been growing in the wake of the Terra crisis. Several top officials in the United States and Europe have called for laws to protect investors from such a crash.
Terra recovery plan widely criticized
Ackman’s comments also come amid widespread backlash against Terra founder Do Kwon over a proposed recovery plan. Kwon had on Monday proposed forking the Terra blockchain into a new offshoot, titled Terra 2.0.
But several major crypto personalities, including Binance CEO Changpeng Zhao, criticized the plan, citing concerns that it would just dilute LUNA holders, instead of creating new value.
The Terra community has broadly called for using the blockchain’s reserves to return some value to its holders. Others have also suggested a mint and burn mechanic to help support token prices.
- Elrond Price Jumps By 9% Over This Announcement
- XRP Holding Better Than Most Altcoins, Here’s Why
- Breaking: Polygon, Major Blockchains Hit With Network Attack
- New Crypto Rules In Europe: A Global Standard For Regulation?
- Third Biggest Whale Adds 1,416 Bitcoins In Last 2 Days; Will This Pump BTC?
- ‘Big Short’ Michael Burry Says Bitcoin Crash Is Only Halfway Through
- These Whales Scoop $850 mln Worth FTX Tokens Ahead Of BlockFi Deal
- Breaking: El Salvador Buys 80 Bitcoin (BTC), Here’s How Prices Reacted
- U.S. DoJ Slaps Charges Against Promoters of Baller Ape Club NFT In Rug Pull Scam
- Canada-based Ledn Challenges FTX’s Bid of BlockFi Acquisition With Better Proposal
- Polygon Price Analysis: V-top Reversal may Direct MATIC to $0.31 Support
- ETH Price Analysis: Is Ethereum Dropping To Three Digits?
- Bitcoin Price Analysis- BTC on Losing Streak Nearing $17800; Will it Hold?
- NEAR Price Analysis: Falling Prices Eye $3 Breakdown; Should Coin Holders Worry?
- SHIB Price Analysis: Sustained Selling may Lead $SHIB to $0.0000074?
- Sandbox Price Analysis: Crashing SAND Prices Warns 25% Downfall
- Solana Price Analysis: $36 Breakdown Teases SOL Price to Revisit $26
- Chainlink Price Analysis: Wedge Pattern could Lead LINK price below to $5
- AAVE Price Analysis: Buyers Need $76.6 Breakout to Trigger Bullish Recovery
- Apecoin Price Analysis: Rising APE Price Knockout Another Barrier; is $6 Next?