Stablecoin rescue plan gets cold shoulder from big investors

BACKERS of TerraUSD (UST), the closely-watched algorithmic stablecoin that broke from its dollar peg, are struggling to win investor support for a rescue.

Talks stalled after big-name firms were approached by various individuals with connections to Terraform Labs in recent days, according to sources familiar with the matter who asked not be named because the discussions are private.

Do Kwon, CEO of Terraform Labs and UST's chief evangelist, repeatedly alluded on Twitter to recovery efforts, saying on May 10 that he was "getting close" and encouraging his followers to "stay strong". Kwon did not return a request for comment.

Terraform Labs said they were unable to comment. "The TFL team is heads down right now so we would be unable to fulfil commentary requests at the moment," a spokesperson told Bloomberg by email.

Alameda Research, Celsius, Galaxy Digital Holdings, Jane Street, Jump Crypto, and Nexo were among those in these discussions, the people said.

Celsius tweeted that they were not involved, while Nexo confirmed to Bloomberg that they had been approached and had opted not to join the effort. Jane Street and Alameda declined to comment.

Jump Crypto, whose president Kanav Kariya is a member of the Luna Foundation Guard, also declined to comment. Jump Crypto is an affiliate of Jump Trading. Galaxy did not return a request for comment.

The situation is fluid and could change based on market conditions, the people said. As of late-afternoon in New York, UST was trading around 67 US cents, according to data from Binance.

Potential investors in one proposed deal from the Luna Foundation Guard were offered the opportunity to buy a related token, Luna, at a 50 per cent discount to the spot price, Kumar Gaurav, the founder and chief executive of crypto liquidity provider Cashaa, told Bloomberg News earlier in an interview, adding his firm won't participate.

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The backers of the stablecoin were trying to raise about US$1.5 billion to shore up the token, Gaurav said. The Block reported the fundraising plans on Tuesday (May 10).

The Luna Foundation Guard did not respond to repeated requests for comment. BLOOMBERG