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Main page Opinion, US Market, Michael Novogratz, Stablecoins

Terra's catastrophic collapse was the result of the downward pressure on reserve assets coupled with UST withdrawals. That's what Mike Novogratz, the CEO of Galaxy Digital, told shareholders and partners in a special letter.

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Novogratz wrote that a series of consequences triggered a stress scenario akin to a "run on the bank," and UST's reserves weren't prepared to prevent the collapse. He added:

"With hindsight things always look clearer. My tattoo will be a constant reminder that venture investing requires humility."

For Galaxy Digital, Terra's spectacular downfall was palpable as the venture firm is reportedly preparing for a loss of $300 million in net comprehensive income this quarter. Although Novogratz reassured that the firm remains in a "strong capital and liquidity position," he admitted that the collapse "dented confidence in crypto and DeFi."

UK Won't Legalize Algorithmic Stablecoins after Terra Drama

The move comes after terraUSD (UST), an algorithmic stablecoin on the Terra blockchain, de-pegged from the US dollar, dropping to $0.15. Amid price fluctuations, Terraform Labs, the company behind Terra, several times suspended block generation to prevent governance attacks following severe LUNA inflation.

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