FTX CEO Sam Bankman-Fried a.k.a SBF stood boldly behind Terra’s co-founder Do Kwon and has shared his views on one of the worst debacles in the crypto industry. Supporting the beleaguered founder, SBF sought to give his piece of mind in one of the most talked-about issues- the LUNA/UST mechanism which has come under intense criticism.
In his Twitter thread, SBF said the LUNA/UST was very transparent and not distorted as widely viewed. “Do Kwon obviously stood by it, morally and in terms of press, long after he should have backed off,” the tweet read.
Kwon didn’t claim that UST was backed 1:1 by USD. He claimed, accurately, that it was backed by a bunch of volatile assets. It was very publicly clear that those assets might go down, and the rest followed. Again–I don’t want to condone the behavior. But it’s different.
Kwon who is currently facing mounting criticism over his stablecoin fiasco was on one occasion labeled crypto’s Elizabeth Holmes drawing similarities to her defrauding investors in the Infamous Theranos Scandal that rocked the US healthcare industry.
According to SBF, Luna was driven by mass enthusiasm, excitement, and over-the-top marketing and meme gimmicks that made people believe in something which was going to falter according to the publicly available information.
“That marketing was probably bad. But it wasn’t the *same* type of bad as Theranos,” he said.
SBF: “Most Bad Investments Aren’t Ponzi Schemes”
The FTX founder tried to dispel myths about investments that yield losses by saying “most bad investments aren’t Ponzi schemes. Some are fraud, some are bad luck, and some are somewhere in between.”
He reasoned this by citing instances of investments that have lost more than 50% of their value in 2022, including Cathie Wood’s ARKK Investment, AMC Entertainment, Netflix, and LUNA.
One can’t help but compare the stark contrast to Binance Changpeng Zhao’s reaction who slammed UST as “one over-leveraged ‘stable’ coin” and criticized the design flaw of its ecosystem.
Following the meltdown, the world’s largest cryptocurrency exchange responded by halting the trading of Terraform Labs’ Terra [Luna] and TerraUSD [UST] tokens on its platform indefinitely.