Wednesday, June 19, 2024

FTX Sam Bankman-Fried Defends Terra’s Founder, Says ‘Most bad Investments Aren’t Ponzi Schemes’

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FTX founder Sam Bankman-Fried has tweeted in defense of Terra ecosystem and its CEO and co-founder, Do Kwon. 

In response to a Coindesk article that described Do Kwon as the Elizabeth Holmes of crypto, Bankman-Fried disagreed, stating that “Not all bad things are the same bad thing.”

1) Not all bad things are the same bad thing

— SBF (@SBF_FTX) May 14, 2022

The comparison between Holmes and Kwon is that both led a project that eventually failed, losing billions. But SBF stated that while LUNA/UST was bad and ended badly, it’s not the same as Holmes’ Theranos failure.

His reasoning is simple; No one is accusing Holmes of Theranos’ failure. She’s facing trial because she lied. Holmes had lied to investors about the capacity of the technology she was developing, but Do Kwon made no such misrepresentations. 

According to SBF, LUNA/UST was very transparent, and Do Kwon stood by it despite signs that it could crash. Kwon never lied about the fact that UST was backed by volatile assets and could crash.

7) But he 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.

— SBF (@SBF_FTX) May 14, 2022

In his opinion, SBF believed that it was simply mass enthusiasm and marketing that fueled LUNA’s growth despite clear evidence that it’ll crash. He clarified that while the “marketing was probably bad. It wasn’t the *same* type of bad as Theranos.”

The FTX CEO also pointed out that people losing money on a project doesn’t make it a Ponzi scheme. He cited examples of other investments that have lost more than 50% of their value this year, including Cathie Wood’s ARKK Investment, AMC Entertainment, Netflix, and LUNA.

“Most bad investments aren’t Ponzi schemes. Some are fraud, some are bad luck, and some are somewhere in between,” he said.

LUNA Draws Ire of Binance CZ
One of the major critics of Terra is Binance Changpeng Zhao who described UST as “one over-leveraged ‘stable’ coin” and criticized the design flaw of its ecosystem. 

1. At #Binance we prioritize user protection. We made the decision to suspend LUNA and UST trading. Here’s why.

A thread 👇

— CZ 🔶 Binance (@cz_binance) May 13, 2022

According to him, he’s disappointed in how the Terra team handled the situation. He continued that the team failed to act on any Binance requests, which included delisting the network, burning extra minted LUNA, and recovering the UST peg.

Personal opinion. NFA.

This won’t work.
– forking does not give the new fork any value. That’s wishful thinking.
– one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).

Where is all the BTC that was supposed to be used as reserves?

— CZ 🔶 Binance (@cz_binance) May 14, 2022

Speaking on the plan to save Terra by creating a new hard fork for LUNA, CZ thinks that won’t work saying 

forking does not give the new fork any value. That’s wishful thinking. one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).

The design flaw: minting coins (printing money) does not create value, it just dilutes the existing coin holders.

Incentives doesn’t create value. It is just a bootstrap mechanism.

Build products people use.

— CZ 🔶 Binance (@cz_binance) May 13, 2022

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