Head of the Office of the Currency Control (OCC), Terra (Luna) reiterated the risks of investing in crypto assets following its collapse, warning investors.
Acting Currency Controller of the OCC, conducting a new interview with Yahoo Finance Michael HsuHe thinks that with the collapse of Terra, vulnerabilities in the crypto space emerged.
“I think the collapse of the Terra ecosystem revealed a lot about the crypto world, but I want to focus on three main issues.
First of all, it turns out that stailcoins are not actually ‘stable’. Frankly, the fact that an $18 billion stablecoin collapsed so quickly is something that proves it.
Second, much of the growth in crypto is driven by ‘hype’. One reason Terra was able to grow so fast was because it was overdone and added very attractive yields that were not sustainable.
Third, the ‘contagion risk’ is real. Sales often trigger market-wide sales very quickly. I think it lost half a trillion dollars in a relatively short period of time and put some pressure on Tether, another non-algorithmic stablecoin, causing it to lose a bit of its stable.
I think some of those lessons have made much more clear some of the vulnerabilities that anyone in that field needs to be really mindful of.”
Hsu also commented on the accusations that Terra was a Ponzi scheme.
“I think a crypto executive had a saying, ‘if you don’t understand where our data is coming from, you’re probably hearing the words of big-pocket investors.’ I think that’s a very valuable statement and a lot of things have happened in the past year that we don’t understand where so much yield comes from.
However, if you want to make an investment in this field, you must ‘really’ understand the source of this yield.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.