Bill Ackman, an activist investor, commented on the Terra issue, describing the protocol as an altcoin version of the ponzi scam.
Bill Ackman calls Terra a “ponzi scheme”
The revelations come after Terra Blokchain lost nearly all of its value in a matter of days due to the issuance of the UST stablecoin, which triggered a massive bank run. According to Ackman, UST’s promise of a 20% return on value with no major activity behind it is the most revealing sign of a ponzi scheme.
Ackman is the founder of hedge firm Pershing Square Capital. His outspoken and hands-on investing style has earned him the nickname “the activist investor.” His latest statements are also an indication of his support for Blockchain. He also praised blockchain as a “great technology” on Twitter, but said startups like Terra are dimming the industry. According to Ackman, the appeal of the platform is due to the digitization of LUNA and the buzz around the crypto market.
Activist investor agrees on regulation of altcoin market
Ackman advocates stronger self-regulation in the altcoin market, especially for companies that do not have any underlying businesses to support the tokens. Before debilitating legislation shuts down the great and the bad, the crypto industry should self-regulate other crypto startups without underlying economic concepts. According to Ackman, if hype tokens are not backed by companies that provide value, the entire crypto industry will be destroyed.
After the Terra incident, which we covered in the Somanews news, concerns about the increased crypto regulation have increased. Some leading US and European officials have advocated enacting laws to protect investors from such a disaster.
Terra’s rehabilitation strategy critically reviewed
Ackman’s remarks came as Terra founder Do Kwon faced significant criticism over a proposed rescue plan. On Monday, Kwon suggested turning the Terra “Terra 2.0” into a new upgrade.
However, several prominent crypto influencers, including Binance CEO Changpeng Zhao, have questioned the concept, claiming that instead of generating new value, it will dilute LUNA investors. The Terra community has argued that blockchain reserves should be used to restore some value to their holders. Others have proposed a mint and burn mechanism to help keep their token value stable.