After Burning USD 1.4 Million Worth of UST, Terra Plans to Stake 240 Million LUNA

Alexander Salazar
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After Burning USD 1.4 Million Worth of UST, Terra Plans to Stake 240 Million LUNA

Terra highlighted that they would stake USD 200 million worth of LUNA on recovering the value of UST. The cryptocurrency has devalued massively over the last few days, going from above USD 80 to below USD 1.

After the price of the assets of Terraform Labs plummeted, a proposal emerged to try to address the issue. Terra said that they plan to burn a significant amount of TerraUSD (UST) to restore the balance of the stablecoin.

It Is Necessary to Stop the Devaluation of UST

Terra raises the need to reduce the number of existing UST coins to balance the value of the stablecoin. They noted that they expect that to happen while they expand the pooled fund and face the excess supply in the market.

Do Kwon, the CEO of Terraform Labs, is moving forward with proposal 1164, which has received over 220,000 votes. In the first place, Terra plans to burn around USD 1.4 million worth of UST to rescue the price of those coins.

The Users of UST Will Receive an Incentive

Even though the representatives of Terra agreed to burn UST, they have other strategies in mind. They said they would need to quickly wipe out all the unpayable debt caused by the depreciation of those assets.

The official Twitter account of Terra stated that the main obstacle is wiping out uncollectable debt from the UST in circulation. They said that they would have to do it fast enough for the system to restore the health of the differentials in the chain.

Bearing that in mind, Terra plans to burn coins with the Agora proposal, which consists of cutting 11% of outstanding UST liabilities. In addition, they pointed out that they would address the existing devaluation with a new staking process in the LUNA market.

In that regard, the initiative will have a capital of 240 million LUNA, equivalent to around USD 200 million. Terra highlighted that they would stake that amount on reinforcing the influence of the asset. However, some analysts are doubtful about the effectiveness of that proposal, as they consider it not to be enough.

The Price of LUNA Plummets

The market has witnessed that LUNA has suffered a massive devaluation over the last few days. Its price went from being above USD 80 to bottoming out at less than USD 1.

Volatility took over the expectations of traders, giving way to a wave of selling that would not stop until the next day. Likewise, investors distrust impacted the UST price, leading it to lose the balance that characterizes stablecoins.

The irregularities observed raise suspicions that Terra plans to burn part of its coins following attacks from its competitors. However, all would be mere rumors as UST struggles to recover from the low of USD 0.31 on May 11th.

LUNA is trading at around USD 0.000179 and has accumulated an 824.5% gain over the last 24 hours. While its daily trading volume is above USD 1.41 billion, its market capitalization is about USD 1.14 billion, according to CoinGecko.

By Alexander Salazar

El Salvador, Tesla, and MicroStrategy Registered Millionaire Losses during the Fall of Bitcoin

Jenson Nunez
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El Salvador, Tesla, and MicroStrategy Registered Millionaire Losses during the Fall of Bitcoin

The three Bitcoin whales posted losses of a few hundred million dollars on their portfolios due to the recent market crash.

While markets seem to be recovering this Friday, investors got scared as significant digital assets registered a massive fall earlier this week. With Bitcoin crumbling down below $30,000 and other assets crashing behind, many investors started to show losses; and the great whales also got included in the event.

Bitcoin, the most significant digital asset by market capitalization, fell to lows not seen since 2020, when it slipped as low as $26,350 on Thursday, according to data from CoinMarketCap. The drop, amid a widespread collapse in the global digital currency market, translates to a 60% correction from its all-time high of $68,000, registered in November 2021.

Counting the Losses

Investors who purchased Bitcoin around last year’s bull run have seen their profits vanish since then. Especially this 2022, a period that, to date, has been remarked by huge volatility.

But even those who acquired the currency before its rally towards 2020 could now struggle with a red portfolio. The bets of some of the principal investors in the market will go counted here, such as MicroStrategy, the enormous institutional whale of Bitcoin, and El Salvador, the first country in the world to save reserves in digital assets.

El Salvador

The Central American nation, which became the first nation worldwide to accept Bitcoin as legal tender last year, has been gathering a massive wealth from the digital asset.

The strategy, conducted by the Salvadoran president, Nayib Bukele, relies on the direct purchase of Bitcoin and its consolidation through the mining activity. This week, the most recent investment got revealed in 500 BTC for USD 30,744 per coin.

MicroStrategy’s story

MicroStrategy, an enterprise software entity, began acquiring Bitcoin in August 2020 as part of a strategy to minimize its cash holdings and manage the fiat inflation panorama presented by the COVID-19 pandemic. The firm kept purchasing bitcoins steadily, making a wealth registered at 129,218 BTC.

The firm’s CEO, Michael Saylor, is a great enthusiast and defender of Bitcoin. In the past, he showed his enthusiasm for the leading digital asset due to its deflationary nature, saying it brings a better haven than gold.

Tesla

The investment in Bitcoin of the electric car company managed by billionaire Elon Musk has failed to bear fruit this week. Tesla first revealed in February 2021 that it had acquired $1.5 billion worth of Bitcoin. According to a file issued with the US Securities and Exchange Commission, the purchase happened between January and early February.

Although there is no information about the number of bitcoins held by Tesla, calculations based on these figures suggest that Tesla could have recorded a loss of around 20%, which possibly translates to a few hundred million dollars.

By: Jenson Nuñez

Analysis of the Cryptocurrency LUNA Following Its Crash on May 13th

Alexander Salazar
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Analysis of the Cryptocurrency LUNA Following Its Crash on May 13th

The sharp drop in the price LUNA has made panic increasingly evident, suggesting the possibility of predicting its collapse. The insolvency of traders caused the price of Terra token to crash by 98%, losing most of its market capitalization.

The crypto market has struggled with a dangerous hurricane that has affected all its participants. On May 13th, the price of the cryptocurrency LUNA, which has drawn a lot of attention, crashed to USD 0.005.

Between May 11th and 12th, the value of the Terra (LUNA) token plunged by more than 99%. It went from USD 1 to a low of less than USD 0.0083 in 24 hours.

LUNA is trading at around USD 0.000372 after reaching a maximum price of above USD 119 less than 40 days ago. Amid the plummeting of the cryptocurrency, panic has become increasingly evident, suggesting the possibility of predicting the collapse of LUNA.

The Inherent Characteristics of Stablecoins Contribute to the Decline

Fiat money or an equivalent asset back the stablecoins USDT by Tether and USDC by Circle. However, the design of the cryptocurrency LUNA allows it to maintain the peg through a mathematical algorithm and active trading. UST has recently lost its 1:1 parity with the US dollar due to high selling pressure for the massive drain of Anchor.

As the on-chain mint-and-burn mechanics tie them together, that massive short led UST and LUNA to sharp drops. Then the disconnection between the two crypto assets happened.

Traders declared insolvency when they realized that USD 1 of LUNA was no longer worth USD 1 of UST. For that reason, the Terra token crashed by 98% of its price, losing most of its market capitalization.

LUNA Can Teach a Lesson to Investors

Amid the drop in the price of LUNA, many investors may be concerned about how to prevent it from happening to them. The characteristics of altcoins determine the volatility and high risk of the native cryptocurrency of Terra. Leading cryptocurrencies like Bitcoin and Ether are undoubtedly more resistant to risk.

The Bitcoin market has recently been unstable as it is undergoing a crypto winter. However, some traders still earn more than 1000% ROI in a bearish market and can multiply their ROI with 100x leverage.

An Example of How 100x Leverage Works

To better understand 100x leverage, it is relevant to know its close relationship with margin/leverage trading. Margin is the minimum percentage of the amount needed as collateral to open an increased position.

Leverage is the amount by which a margin trader can multiply his position during the transaction. Therefore, he can increase his exposure and potential profit by 100x if he opens a trade with 100x leverage.

The following example will illustrate how 100x leverage works. A trader can use 1 BTC to open a long contract when Bitcoin is at USD 30,000. The next day, the price of Bitcoin will increase to USD 35,000, so the profit will be USD 5,000. That means that 100 BTC/USD 35,000 is equivalent to around 14.2 BTC, making the ROI 1420%.

By Alexander Salazar

The Onecoin Creator is Now One of the Most Prominent Criminals in Europe

Jenson Nunez
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The Onecoin Creator is Now One of the Most Prominent Criminals in Europe

Ruja Ignatova, the Founder of Onecoin, got labeled as one of the most wanted criminals in the European region.

The mastermind behind the infamous crypto scheme Onecoin, Ruja Ignatova, now occupies a spot on the list of most prominent fugitives on European soil. Also called the “Crypto Queen,” she suddenly vanished almost five years after the Ponzi archetype she created, collecting billions of dollars from investors worldwide and defrauding them.

The Europol is now offering a prize registered at 5,000 euros ($5,200) for vital information that could guide the officials to the capture of Ruja Ignatova.

The information describes Ignatova as the principal intellectual and creator of the Onecoin digital asset. According to Europol, she seduced prominent business people worldwide to trust their funds in this worthless asset.

 Ruzha or Rouja are also familiar names for her; she is german and is currently 42 years old and has brown eyes. She speaks at least three languages, especially English and German.

Thousands of Millions Disappeared

The agency also explains that the losses surpass the double-digit million while highlighting that the impact caused worldwide would get registered at a massive amount of money.

It is worth highlighting that the promised prize is only for private individuals who bring vital information about their location and not for officials that dedicate themselves to prosecuting criminal behaviors.

Crypto Queen got included in Europe’s most wanted list at the initiative of German law enforcement officials. According to a statement revealed by the police in the western German province of North Rhine-Westphalia, the Bielefeld prosecutor’s office gave a 5,000 euro reward for those who provide vital data about the criminals.

Brief History of a Massive Scam

Ruja Ignatova released Onecoin back in 2014. The project’s digital asset got billed as the “Bitcoin killer” and encouraged through Bulgaria-based offshore entities Onecoin Ltd., registered in Dubai, and Onelife Network Ltd, incorporated in Belize. Both got created by Ignatova and Sebastian Greenwood, who got jailed in the US.

Ruja’s brother, Konstantin Ignatov, another vital protagonist in the foundation of Onecoin, got caught in Los Angeles in 2019 and received accusations of executing crimes related to finances. Since then, he started contributing to investigators working on the situation, testified about Onecoin’s links to organized crime, pleaded guilty, and sought witness protection.

In November 2021, a lawyer working for the investors suggested Bulgaria take action on the situation, claiming that the scam was still carrying out its activities in the nation. In a petition to the Bulgarian ombudsman, Jonathan Levy charged the officials for failing to bring justice to the affected users.

Bitcoin.com also highlighted that the entities Ignatovs and Onecoin still had power over the property, cryptocurrencies, and trust funds that surpassed 12.5 billion euros.

Onecoin kept working in some capacity, penetrating various countries in different ways. In 2020, 8 people allegedly linked to the scam got arrested in Argentina.

By: Jenson Nuñez

Governor of the Bank of Spain Calls for Rapid Regulation of Digital Assets and DeFi

Jenson Nunez
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0
Governor of the Bank of Spain Calls for Rapid Regulation of Digital Assets and DeFi

The governor of the Bank of Spain, Pablo Hernández de Cos, highlighted that there must be a quick movement to set regulations on digital assets.

Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, has long expressed himself about the requirements for crypto assets to suffer a stronger regulation.

The governor has also talked about the risks of the banking system being exposed to crypto. And, in fact, for almost two years, this central bank has been closely following the issue of digital assets.

In a new public intervention, he has said that the cryptocurrency and decentralized finance space must get regulated as soon as possible to avoid risks of financial instability. Hernández de Cos also expressed how this quick approach should bring the crypto-financial system within reach of regulation before it expands.

Fast movement

Hernández de Cos, who also plays a role in the Basel Committee on Banking Supervision, explained his thoughts on how he thinks digital asset regulation should get covered.

He explained these thoughts in a keynote speech held at the 36th annual general meeting International Swaps Association and derivatives.

There, Hernández de Cos explained that there must be a fast movement to regulate digital assets and decentralized financial markets before expanding and impacting the economic system’s financial stability.

He stated that despite this phenomenal growth, crypto assets still account for only around 1% of total global financial support, and banks’ direct exposures are relatively limited. However, such markets show enough potential to escalate quickly and risks to individual banks and financial stability.

In addition, the governor suggested a forward-looking regulatory and supervisory approach to the subject, explaining that there may be a balance between welcoming these technologies while also reducing their risks.

The Critics

Hernández de Cos also took the opportunity to criticize the current state of the market, citing the fever caused by meme coins like Dogecoin and the effect that the thoughts of Tesla and SpaceX CEO Elon Musk can have on these markets.

Doubts about Decentralization

He also analyzed decentralization, asking if a genuinely decentralized financial system could ever get achieved during these actions. An expansive literature has highlighted the “paradox” and “illusion” of the current Defi structure. Despite its name, some level of centralization is unavoidable and where structural aspects could lead to a concentration of power.

Such criticism is not limited to vested stakeholders: key proponents of DeFi have also recognized the “trilemma” of having a secure, scalable, and decentralized financial system.

By: Jenson Nuñez

The Shanghai High Court Now Protects Bitcoin as Virtual Property

Alexander Salazar
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0
The Shanghai High Court Now Protects Bitcoin as Virtual Property

The High Court recognized Bitcoin as a financial value and said they should handle it on a par with other assets. The court ruled that Shi Moumou must give Cheng Mou his only Bitcoin back within ten days of sentencing.

The Chinese law now protects Bitcoin (BTC) as virtual property, following a new ruling by the Shanghai High People’s Court. That has taken a new turn in the Asian country concerning the pioneering cryptocurrency.

According to local media, the above High Court has formed a unified opinion on the legal position of Bitcoin. In the actual practice of the trial, they identified it as virtual property.

Liu Yang, a lawyer from Beijing, stated that the court’s ruling would serve as a benchmark for Bitcoin-related civil litigation in Shanghai. He also said that this is the first time a High Court has dealt with a cryptocurrency-related case.

The Chinese People’s High Court is now the highest practical community court in the provincial area. However, nobody knows whether other high courts will share the same view about Bitcoin.

The High Court Says that Bitcoin Is a Virtual Asset

The Shanghai High Court has just ruled that Bitcoin has economic value and officially protects it as a digital asset.

The High Court issued a notice where it recognized Bitcoin as a financial value. They said that the law should handle it on a par with other assets and protect it.

Anyway, the People’s High Court agreed on the legal position of Bitcoin, ruling that it is a virtual property. They said the crypto asset would have to follow the principles dictated by law as it has economic value as an asset.

That ruling could be significant for civil disputes over Bitcoin and other cryptocurrencies in China. It is relevant to remember that the Chinese government banned the mining of crypto assets in the territory last year.

Why the Court Rules that Bitcoin Is a Financial Asset

The statement of the High Court about a case involving Mr. Cheng Mou allows a better understanding of the situation. In October 2020, he filed a lawsuit with the Shanghai Baoshan District People’s Court demanding that Mr. Shi Moumou return his only bitcoin.

On February 23rd, 2021, after the trial, the court ruled that Shi must return the BTC of Cheng within ten days of sentencing. As Moumou refused to do so, Mou decided to seek further redress from the local court system. After that, the Baoshan court arranged for a mediation session between the two parties, which occurred in May 2021.

The High Court declared Bitcoin a virtual asset protected by the law despite the ban on cryptocurrencies in China. The authorities of the Asian countries have had their sights on them for their alleged relationship with illegal activities.

Bitcoin is trading at around USD 30,789 and has accumulated a 2.7% gain over the last 24 hours. While its daily trading volume is above USD 22.79 billion, its market capitalization is roughly USD 587.69 billion, according to CoinGecko.

By Alexander Salazar

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