Terra CEO Do Kwan says the stablecoin was not a Ponzi scheme because the earliest investors were among the hardest hit by the crash
Do Kwon, the founder of Terra, has given his first interview since the spectacular crash of his crypto project in May left many to lose their life savings and lose their faith in so-called stablecoins.
"I’ve never thought about what could happen to me if this fails," the Terraform Labs (TFL) CEO said in an interview on the NFTV series Coinage with host Zack Guzman which aired on Monday.
Kwon said his confidence at the time was justified as the market success of his Terra ecosystem was “inching close to $100 billion (€98 billion)".
He admitted in the interview his faith now "seems super irrational".
Terra's UST and LUNA cryptocurrencies lost nearly $45 billion (€44 billion) in value within 72 hours in May.
The token UST, created by Terraform Labs, was an algorithmic stablecoin, which means that instead of having cash and other assets held in a reserve to back its token, it uses a complex mix of code and Luna to stabilise the process.
Stablecoins claim to be a relatively safe haven in the highly volatile crypto market. But the saga proved algorithmic stablecoins, which are a complicated and lower quality type of banking reserve, are just as volatile as other cryptocurrencies.
Terra not a Ponzi scheme, says Kwon
He said that Terra was not a Ponzi scheme because the earliest investors were among the hardest hit by the crash. Kwon said he could not quantify his losses but described being "down infinite".
Kwon also contended with the possibility of a mole at Terra.
"If you're asking me whether there was a mole at TFL, that's probably, 'Yes.' Whether somebody tried to take advantage of that particular opportunity, I would say that the answer is, 'Yes,'" he said.
"But if those opportunities existed, then the blame is on the person that presented those vulnerabilities in the first place.
"I, and I alone, am responsible for any weaknesses that could have been presented for a short seller to start to take profit".
Kwon moved to Singapore prior to the Terra crash and said he did so out of fear for the safety of his wife and child.
"So what we’re going to do is we’re just going to put out the facts as we know them. We’re going to be totally honest and deal with whatever consequences as they may be," he told Coinage.