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TerraUSD one of the worst scandals in crypto industry history: Coin Metrics co-founder - YouTube
Channel: CNBC Television
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uh nick it's great to have you we've
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been trying to get at this question all
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week what does
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what's happening in stable coins mean
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for the broader crypto market and to me
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this isn't about you know tether
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truthers taking an unwarranted victory
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lap or even algorithmic stable coins
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versus better backed one it's about the
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inability of the industry to self-police
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it feels like for years we've been told
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that crypto's better because the
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incentives are better but is what's
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happening with terror usd how is it not
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a black eye for the entire industry
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it's one of the worst scandals in the
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history of the crypto industry
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it's a gigantic black eye we're talking
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55 billion dollars of paper wealth
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wiped out
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and obviously less in terms of uh
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inflows destroyed uh but you know you're
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looking at a similar scale to layman
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brothers of course not with the systemic
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effects
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uh you know ust wasn't as integrated
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into the real economy partially
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integrated into the crypto economy so
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not a systemic uh you're looking at a
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similar scale to the madoff ponzi right
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that was i think a 65 billion
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paper wealth destroyed
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and and these ideas were fundamentally
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unsound fundamentally unsound economic
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ideas all you had to do was have an
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appreciation for economic history for
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central banking for monetary economics
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and you'd know that that model couldn't
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possibly work and yet it swelled to an
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inordinate size
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uh research desks in in the crypto
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industry were uncritical
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uh a huge number of funds were involved
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in this uh it wasn't just confined to
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retail wasn't like some of these other
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ponzis like plus token or big connect
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that were confined to retail these ideas
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were popular and very few in the crypto
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industry spoke out about them
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uh so it's a black eye you know it's
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obviously destroying a ton of wealth
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that's affecting the other assets but
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it's also a massive massive black eye
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for the credibility of the crypto space
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and it's a huge shame that uh that this
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transpired and that it got so big before
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it collapsed
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right i appreciate those candid terms
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nick i know that uh there weren't a lot
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of loud skeptics you were one of them
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though if you cared to listen very
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closely um people like mike novogratz
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and digi and galaxy digital they were
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actually the backers of this where did
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they go now where does the industry how
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how much did this if this was a made off
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uh scaled scandal how does the industry
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recover from this how long does that
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take
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it's going to be tough i think this is
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going to induce stable coin regulation i
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think congress is going to take a look
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to the extent congress can galvanize
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itself and do anything
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i think financial regulators in this
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country are already aware of it uh
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treasury's aware of it sec was already
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looking into
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luna terra already were it was already
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on their radar now what can they do
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about it that's gonna be more
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challenging this is a korean project is
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offshore
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uh you know the leadership is in korea
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or singapore
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but i think what we can do as an
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industry is acknowledge
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uh you know the the fiat backed model
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the fully reserved model that you see
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with usdc and the like that actually
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works very well
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uh we don't need uh to try and
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undertake financial alchemy
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and uh create an under collateralized
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stable coin with volatile crypto
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collateral uh or or you know the the
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model that tara had where it was very
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recursive and
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you know backed by an equity token that
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was linked to the system it just didn't
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make sense you know i think we can
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acknowledge that these ideas have failed
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algorithmic unbacked or senior and share
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style model stable coins have failed
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since 2016 that was when new bits the
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first one first failed and then there
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was a string of subsequent failures
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we've never seen successes there and so
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i think you know the the default model
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of the stable coin where it's
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convertible and fully preserved uh fully
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redeemable on demand uh you know the you
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know tether has a lot of issues but uh
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it continues to work well it's regained
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its peg the redemptions occurred
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yesterday normally uh usdc i i would say
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is the gold standard for a stable coin
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these work just great
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so let's stop trying to
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you know engage in this in this alchemy
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and uh you know return to ideas that
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make sense and return to pro you know
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products and protocols that work
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uh that's the first step here is to
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abandon these bad ideas
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