The Luna token crash was not a fraud, but a poorly built house of cards

Tether CTO Paolo Ardoino saw no signs of fraud in the collapse of the Terra ecosystem and the UST stablecoin. In his opinion, it is simply a matter of poor project architecture.

«I don’t know Do Kwon. And let’s give him the benefit of the doubt on fraud. He created this project and was overzealous about it and others. He was confident in his rightness and attracted many people. They probably supported him for economic reasons. But the project itself was not fraudulent. It was a poorly designed project, like many others, with poor architecture and planning. Like a house of cards, it could have collapsed at any time, but of course Kwon couldn’t say that, because then Terra would have collapsed much faster. And again, it was clear to me and many others from the beginning that this was a bad idea.»

Ardoino added that the rapid growth of UST’s capitalization was the reason for the collapse, as Terra did not have sufficient reserves even despite their constant purchases of UST: «Essentially, we saw a cascading fall. When they sold reserves to support the UST rate, it put more pressure on the market and they had to sell reserves again. And so on.»