Crypto startup StableGains, which offered customers access to DeFi yields, may be in trouble after putting a bulk of its funds into Terra.
The firm offered depositors a 15% yield by locking their funds into Terra’s Anchor Protocol. This was done by converting customer funds into UST.
But after UST crashed, the firm is now struggling to return its customers’ funds. Reports suggest the firm lost as much as $42 million from over 4000 customers. It is now offering USD and USDC withdrawals denominated in UST’s recent peg, which is currently less than $0.1.
Stablegains stops accepting new customers, deposits in doubt
The startup’s website now reads that it is not currently accepting new customers. A Twitter thread on its official page also suggests that the availability of its customer holdings depends on Terra and Anchor Protocol remaining active.
Twitter user @FatManTerra noted that this is likely due to the firm putting most of their customers’ funds into Anchor- which was ground zero of the UST crash.
The firm now appears to be making its users sign a waiver absolving them of liability before they can withdraw their funds. The move has attracted widespread scrutiny on Twitter.
Several users are now calling for intervention by the Securities and Exchange Commission on the matter.
Ok, so *this* is what SEC is supposed to look at
-DeFi app Curve Finance said on Twitter
Stablegains is far from the only casualty of Terra. Recent data showed L-1 blockchains logged heavy losses after Terra’s crash.
SEC plans tougher crypto regulations after Terra
Terra’s crash has attracted ire from financial regulators in several countries. On Wednesday, SEC Chain Gary Gensler outlined stricter regulations for cryptocurrencies in the wake of the crash.
In an address, Gensler said initial coin offerings will be subject to more registration to establish more accountability. The move will also aim at protecting investors.
Concurrently, South Korea is also considering tougher crypto regulations after widespread investor losses due to the Terra debacle.