In the end, a drop in crypto prices appeared to put the company under more pressure than it could withstand.
The company drew scrutiny from several state regulators. When the price of Luna plummeted in May, TerraUSD fell in tandem – a “death spiral” that destabilized the broader market and plunged some investors into financial ruin.įor months, critics wondered how Celsius could sustain such high yields without putting its depositors’ funds in jeopardy through risky investments. The coin’s price was algorithmically linked to a sister cryptocurrency, Luna. The coin was hyped by its founder, Do Kwon, who raised more than $ 200 million from major investment firms such as Lightspeed Venture Partners and Galaxy Digital, even as critics warned that the project was unstable. Terraform Labs, for example, offered TerraUSD, a so-called stablecoin with a fixed value linked to the US dollar. Skeptics have pointed out that many of the most popular firms offered products underpinned by risky financial engineering. There have been warning signs that some crypto companies were not sustainable. “But you also have some really strong companies that are trading way below they should.” “You certainly have some overhyped companies that don’t have the fundamentals,” said Mike Jones, an investor at the venture firm Science Inc. This time, investors predict there will be more survivors. Read More on the World of Cryptocurrencies
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