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Tether Co-founder Brock Pierce Cautions Against Putting ‘Too Much Trust’ Into New Projects

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Tether Co-founder Brock Pierce Cautions Against Putting ‘Too Much Trust’ Into New Projects

Bitcoin Foundation Chairman and Tether co-founder Brock Pierce sat down with Bloomberg, weighing in on the demise of TerraUSD as well as the market crash.

Users of the coin have reportedly lost millions of dollars in the collapse, after Terra’s algorithmically engineered stablecoin lost its 1-to-1 peg with the U.S. Dollar, causing a hemorrhaging effect where both Terra and Luna’s price plummeted.

Pierce says that while this experiment got “too big, too fast,” it hasn’t negatively impacted the rest of the ecosystem, noting that “the problem with this experiment is that people put too much trust in it too soon.”

Do Kwon recently amended his proposal to revive the Terra blockchain, suggesting the creation of Luna (LUNA) 2.0 tokens on an entirely new blockchain. However, many of come to question the legitimacy of his proposal, as his amendment to it comes in the middle of an on-chain vote.

The executive commented that while the Terra LUNA and UST experiment got ‘too big, too fast,’ it hasn’t negatively impacted the rest of the ecosystem. However, he also said, “the problem with this experiment is that people put too much trust in it too soon.”

Are stablecoins as risky as Yellen says?

Last week, U.S. Treasury Secretary Janet Yellen warned about the risk of a “bank run” where investors flee stablecoins, which could potentially cause a contagion of other markets. Valued at $160 billion, stablecoins have grown so much that many believe there is a form of systemic risk.

Pierce, one of Tether’s co-founders, told CNBC that “Tether breaking its peg is an overstatement,” referencing the many deviations in price Tether has previously experienced. Speaking to market uncertainty, Tether recently announced in its latest quarterly assurance report that its stablecoin reserves are “fully backed”.”

“The Group’s consolidated reserves held for its digital assets issued exceeds the amount required to redeem the digital asset tokens issued,” the report stated. Following Terra’s crash, several other stablecoins also lost their dollar peg amidst the turbulent market, including Tether.

“Well, that was a flash sort of crash that happened for all of a moment. It certainly wasn’t sustained. Yes, that’s not a positive occurrence. But it immediately recovered,” Pierce noted. Yet, Pierce’s trust in algorithmic stablecoins hasn’t been shaken, as he says he believes “there is a place for them in the future.”

Indeed, the ripple effect of the volatile market has renewed calls for immediate regulation of virtual assets.

Fabio Panetta, a member of the executive board of the European Central Bank, recently remarked that “stablecoins are vulnerable to runs,” highlighting that there is ‘no guarantee that stablecoins can be redeemed at par at any time.”

Impact on crypto adoption

Pierce continues to see a long-term value in the crypto space.

“We are absolutely seeing large numbers of people in Latin America using this technology for things like remittances. The fundamentals are there,” he highlighted.

Chainalysis had also noted in its last year’s report that Latin America, along with parts of Africa and  Central and Southern Asia see more web traffic to peer-to-peer (P2P) platforms than other regions. Some experts might credit part of that adoption to Latin America’s high inflation rate. IMF noted last month that “inflation in Latin America’s largest economies is the highest it’s been in 15 years.”

The countries are also moving fast in the region.

Panama’s National Assembly pushed a crypto bill last month that is waiting for President Laurentino Cortizo’s assent. Additionally, top exchanges have opened shop in the Latin American region of Brazil while Argentina is also seeing accelerated crypto adoption.

“In Latin America, unlike other regions, cryptocurrencies play a role beyond the speculative. They play a social role as well, both in sending remittances and also as an alternative to local fiduciary currencies,” says Belo founder Manual Beaudroit.

Gunshy on NFTs?

Despite expectations of increased crypto adoption in the coming months, the executive’s investment advice comes down to the diversification of investment portfolios.

“Make sure that you’re managing your risk sufficiently. Make sure that you don’t have all of your eggs in that basket,” Pierce recommended.

As the markets remain volatile, the executive is also seeing a direct correlation between the “old economy and the new economy” which is likely to continue for now. 

“We see large-cap cryptocurrencies, like Bitcoin and ether, fall less during downturns and rise less during upturns and the smaller caps have bigger fall. That’s likely to continue to be the pattern,” he added.

The executive also cautions investors against putting too much trust in new projects.

Notably, despite being optimistic about the future of NFTs, Pierce confessed that he wouldn’t invest “heavily” in that vertical.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Record Investment Outflows of $423 Million Led to Crypto Bloodbath

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Record Investment Outflows of $423 Million Led to Crypto Bloodbath

Last week saw record outflows of $423 million from crypto assets, according to CoinShares.

The report found that the outflows last weekend were likely responsible for bitcoin’s decline to $17,760. Analyst James Butterfill said: “The outflows were solely focussed on bitcoin, which saw net outflows for the week totaling US$453m.”

BTC outflows bring down institutional investments 

Therefore, if bitcoin is removed from the calculations, Ethereum contributed an inflow of around $11 million while other alts also added minor positive flows, aggregating inflows to the extent of $70 million. 

This was Ethereum’s first inflow after 11 consecutive negative sessions according to CoinShares.

In the past week, the BTC market has slid under the $20,000 level twice. Short-bitcoin saw inflows of $15 million due to the launch of the first U.S.-based short investment product in the week in question, the report noted.

[1/5] This week’s Digital Asset Fund Flows Report is now available! Written by @jbutterfill, the headline for this week is: Record US$423m outflows last week while Short-Bitcoin saw inflows of US$15m. Read on for the highlights -> pic.twitter.com/eIalnFhacv

— CoinShares 👩‍🚀 (@CoinSharesCo) June 27, 2022

Benefits of a crypto bear market

Similar wide margins were last seen in the previous negative peak, in terms of outflows, in Jan at $198 million.

However, in relative terms, Butterfill remarked that the week did not witness the largest negative flows against total assets under management (AuM). 

“This record occurred during the bear market in Feb 2018 where outflows representing 1.6% of AuM were witnessed, while the outflows last week were the third largest on record, representing 1.2% of AuM,” the report noted.

According to FTX CEO Sam Bankman-Fried, the Federal Reserve’s decision to aggressively increase interest rates was the main reason behind the market crash.

But despite the bearish sentiments, some crypto bosses are optimistic about the results of a market downturn. Charlie Silver, founder of Permission.io told Insider: ” There are hundreds of firms that are built on hype and not substance. It will be good for the industry to have them go away.”

“Bear markets are healthy because it resets valuations to reality and flushes out the bad actors. There are many cryptos that are true Ponzi schemes, that pay investors only with new investor money. When the new money dries up the project falls apart,” Silver added.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

The executive order spares all the mined assets from taxation and bans mining anonymous currencies.

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

The National Agency of Prospective Projects (NAPP) in Uzbekistan announced its demands toward crypto mining operators. It would only allow the companies that use solar energy to mine Bitcoin (BTC) or other cryptocurrencies. 

The normative act on the government page, dated June 24, describes the confirmation of “Guidelines on the registration of the crypto assets mining,” and sets the finalization date on July 9. The second article of the document offers an uncompromising wording:

“Mining is being carried out only by the legal entity with the use of electric energy, provided by a solar photovoltaic power plant.”

As a further complication, the miners should own the solar photovoltaic power plant that they will use for energy.

The executive order also obliges any mining operator to obtain a certificate and register in the national registry of crypto mining companies. This procedure demands a brief list of documents, and should take no more than 20 days from submitting to the final decision to the licensing body. The certificates would be valid for one year after the registration.

Related: Go green or die? Bitcoin miners aim for carbon neutrality by mining near data centers

All the currency generated from mining activities would be spared taxation, though the mining farms would face the special tariffs on the consumed energy set by the Uzbekistan government. But, the trade operations with mined assets would have to be conducted only on the exchange platforms that are registered in Uzbekistan. The mining of anonymous cryptocurrencies would be prohibited.

In April 2022, the freshly-restructured NAPP became Uzbekistan’s exclusive crypto regulator with the mission to adopt a special crypto regulation regime in the country. This move came in a row of initiatives launched by the Uzbekistan President Shavkat Mirziyoyev to provide the regulatory framework for crypto. In September 2018, Mirziyoyev signed a law prohibiting local firms from launching their crypto exchanges in Uzbekistan. The law only offered legal status to crypto exchanges established by foreign legal entities.

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Celsius denies allegations on Alex Mashinsky trying to flee US

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Celsius denies allegations on Alex Mashinsky trying to flee US

Celsius CEO Alex Mashinsky wasn’t trying to leave the U.S. last week but has continued to work on recovering liquidity and operations, the company has claimed.

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Celsius denies allegations on Alex Mashinsky trying to flee US

Troubled crypto lending firm Celsius is putting their best foot forward to recover operations alongside CEO Alex Mashinsky, who currently stays in the United States, the company has claimed.

A spokesperson for Celsius has denied rumors that the company’s CEO tried to flee the U.S. last week amid the ongoing liquidity crisis of the Celsius Network.

The representative told Cointelegraph on Monday that the firm continues working on restoring liquidity, stating:

“All Celsius employees — including our CEO — are focused and hard at work in an effort to stabilize liquidity and operations. To that end, any reports that the Celsius CEO has attempted to leave the U.S. are false.”

Celsius’ statement came shortly after Mike Alfred, co-founder of the crypto analytics firm Digital Assets Data, took to Twitter on Sunday to claim that Mashinsky attempted to leave the country last week via Morristown Airport in New Jersey.

Citing an anonymous source, Alfred alleged that Celsius’s CEO was trying to go to Israel. “Unclear at this moment whether he was arrested or simply barred from leaving,” he added.

Alfred’s claims followed a massive GameStop-like “short squeeze” of Celsius, with Celsius’ native token Celsius (CEL) jumping 300% in one week by June 21. CEL price also abruptly rallied more than 600% on June 14, with analysts attributing the event to an exchange glitch or liquidation of short traders.

At the time of writing, CEL is trading at $0.741, down around 5% over the past 24 hours, according to CoinGecko. Celsius’ native token is still up more than 160% over the past 14 days.

Celsius Network token (CEL) 30-day price chart. Source: CoinGecko

Some industry observers in the crypto community have expressed skepticism about Alfred’s tweets about Mashinsky, with many considering his allegations as FUD.

If @Mashinsky attempted to leave the country this week, why are you reporting it now exactly when the CEL price is going down? Seems very coincidental Mike Alfud. And why no mainstream media or crypto media is reporting this? #CelShortSqueeze https://t.co/ynJbzWib9o

— Otis — #CelShortSqueeze ©️ ⚡️ (@otisa502) June 27, 2022

As previously reported by Cointelegraph, Celsius officially announced that it would be “pausing all withdrawals, swaps and transfers between accounts” on June 13. United States regulators subsequently started an investigation into Celsius as multiple accounts on the network were frozen.

Related: South Korean prosecutors ban Terraform Labs employees from exiting the country: Report

According to some analysts, Celsius’ liquidity issues should be attributed to shortcomings of the existing crypto lending model in general, as other lenders in the market have faced similar problems recently.

Celsius has been working hard to fix the consequences of the platform’s liquidity crisis, reportedly onboarding advisers and restructuring consultants to help the platform handle potential filing for bankruptcy. On June 18, Celsius’ lead investor BnkToTheFuture and its co-founder Simon Dixon offered to assist the network by deploying a recovery plan.

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