We’re discontinuing the Stablegains service

What&#x27;s funny about this is that I can recall discussions here and elsewhere from only a few months ago questioning the &quot;guaranteed&quot; super-high returns. I forget who said this but someone awhile ago said in finance said that if someone is promising you consistent above-market returns it&#x27;s either a scam or there is unknown or undisclosed risk.<p>And the Crypto Andys were all like &quot;you just don&#x27;t understand DeFi!&quot; to which the retort is &quot;No, <i>you</i> just don&#x27;t understand finance&quot;.<p>Finance is the way it is for many reasons. There are thousands of years of lessons that have made the system the way it is. I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance.<p>I&#x27;m just sitting on the sidelines watching people relearn all the lessons of finance the hard way, some because they think they understand finance because because they understand merkle trees and consensus protocols but really most just want to get rich quick.

If you are in the U.S. and lost money, please write to your state&#x27;s Attorney General [1].<p>The company is Stablegains, Inc. and the people to name are Kamil Ryszkowski and Emil Rasmessen, co-founders and, I think, Board members. Copy Ken Paxton, Office of the Attorney General, P. O. Box 12548, Austin, Texas as well as his challenger George P. Bush at P. O. Box 26677, also in Austin. (Stablegains and its founders are in Texas. They are spearheading the criminal complaint.)<p>[1] <a href="https:&#x2F;&#x2F;www.usa.gov&#x2F;state-attorney-general" rel="nofollow">https:&#x2F;&#x2F;www.usa.gov&#x2F;state-attorney-general</a>

&gt; While we have informed users that there are no absolute guarantees against risks<p>I&#x27;m... uh.... fairly certain this was not the crux of their marketing which severly downplayed the underlying risk. There is also a huge spectrum between &quot;we cannot guarantee that there is 0 risk&quot; (which seems to be what the above sentence is saying), and &quot;there exists a risk that all of your funds disappears in 24 hours&quot;.<p>It seems like there is some <i>serious</i> rewriting of history going on here.<p>Question though, do the founders here have any potential criminal liability from this whole situation (including <i>apparently</i> lying about what they were doing with their customers funds)?

Written as if no mistakes were made on their end. Paraphrasing:<p>&quot;We all thought UST and Anchor were a source of stable &gt;10%&#x2F;yr gains that you could trust for your corporate treasury. That the yield instead turned out to be -99% is quite disappointing, and makes this a natural time for us to bring our service to an end. It&#x27;s been a pleasure to serve you.&quot;

Previous discussion: YC W22 Stablegains is being sued for losing $42m in funds from 4878 customers <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=31431224" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=31431224</a>

After I read about this Terra ecosystem, it looks very suspicious: first, you buy UST tokens, investing real money. You are promised a yield up to 20% (suspicious point 1). Then, you deposit your UST so that other people can lend it. But the terms look weird to me (suspicious point 2): first, the loans are &quot;overcollateralized&quot;, so, for example, you need to put down equivalent of $100 to get a loan of $70. Second, the interest rate on the loan is ridiculously high - in the range of 30%. Who would take such a loan?<p>They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don&#x27;t think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens.<p>The support page at Stablegains site says [1]:<p>&gt; They [Digital finance protocols] are more efficient than traditional finance<p>I can&#x27;t see how 30% interest rate overcollateralized loans are &quot;more efficient&quot; than traditional bank loans with rates below 10% per year.<p>[1] <a href="https:&#x2F;&#x2F;stablegains.zendesk.com&#x2F;hc&#x2F;en-us&#x2F;articles&#x2F;4402680375569-What-happens-to-my-money-when-I-deposit-it-with-Stablegains-How-is-yield-generated-" rel="nofollow">https:&#x2F;&#x2F;stablegains.zendesk.com&#x2F;hc&#x2F;en-us&#x2F;articles&#x2F;4402680375...</a>

lol. Even beanie babies were a longer-term investment vehicle than this. I just hope these recent very public and very embarrassing failures are enough to discourage the average person from wasting their money on these scams. I also hope the people behind this get investigated for fraud.

How on god’s earth did YC invest in this without seeing through the obvious bullshit?<p>YC has some blood on its hands here - their investment lent legitimacy to this scam.

TerraUSD Price (UST) $0.05468<p>So, 95% of the value is gone.<p>Can anyone explain how the fork, airdrop, and other gyrations the Terra&#x2F;USD promoter is proposing will work, and where any actual money comes from?

I recommend skimming over the list of blog posts shared over the course of a year about the rise and decline of a crypto startup. It&#x27;s a great post-mortem: <a href="https:&#x2F;&#x2F;medium.com&#x2F;@kamil.ryszkowski" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@kamil.ryszkowski</a>

IMO, every single exchange is at least partially responsible for misleading users. Binance.US and OKCoin specifically marketed UST as a stablecoin that you could earn 20%. Marketing it as a stablecoin is a very clear signal that it has less risk.<p>Yes, users should inform themselves, but exchanges (as well as companies like Stablegains) need to be held accountable.

people who bet early, made big money. people who came in on the hype lost everything. the definition of pyramid schemes.<p>Oh well. We&#x27;ll see, it might bounce back as these things do.

So the options are to withdraw to USD at 5% value, or transfer the ust to another wallet to qualify for a &quot;potential airdrop&quot; but probably lose the 5% as ust goes to 0?

I guess they didn&#x27;t get the memo about going default alive.

UST, a stable coin not even pretending to be backed by the very thing it was pegged to fails. Unlike USDT, USDC or GUSD, there was a documented plan of attack to take UST down 6 months ago, someone just raised enough capitol to execute it.

It&#x27;s pathetic that regulators haven&#x27;t stopped this nonsense. These scams don&#x27;t even last 6 months anymore, it&#x27;s a joke

Least corrupt crypto company.<p>Return is directly correlated to risk, so when a black box corporation is promising 15% returns and marketing itself as a “simple and safe” way for its users to benefit from “advances in financial technology.” It&#x27;s probably not safe, but it is very simple.

Stablehains sounds like something from a 2am infomercial. I have no idea why people would fall for this garbage.

Why did YC fund this fairly obvious fraud?

FYI, for anyone else withdrawing funds:<p>I requested an ACH withdrawal at 5pm pacific on 5.23 It was processed 13 hours later at 645am on 5.24 The conversion rate I received was 0.03850612745 If you view the UST value during that window, it was worth almost twice that rate on average: <a href="https:&#x2F;&#x2F;coinmarketcap.com&#x2F;currencies&#x2F;terrausd&#x2F;" rel="nofollow">https:&#x2F;&#x2F;coinmarketcap.com&#x2F;currencies&#x2F;terrausd&#x2F;</a><p><a href="https:&#x2F;&#x2F;etherscan.io&#x2F;tx&#x2F;0x6ae021b3bd9848ade6863820092dcf2844c8f0c4c8e9bdd3e8f2922d0e2bcafd" rel="nofollow">https:&#x2F;&#x2F;etherscan.io&#x2F;tx&#x2F;0x6ae021b3bd9848ade6863820092dcf2844...</a><p>Just a warning for anyone expecting to get out with even the value of your UST...

Obviously I&#x27;m a little out of the loop, but what is the &quot;attack&quot; they talk about in the new plan? I thought the coin just death spiraled.

A great related article from last year about the &quot;Inherent fragility of algorithmic stablecoins&quot; it also mentions Terra: <a href="http:&#x2F;&#x2F;www.wakeforestlawreview.com&#x2F;2021&#x2F;10&#x2F;built-to-fail-the-inherent-fragility-of-algorithmic-stablecoins&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.wakeforestlawreview.com&#x2F;2021&#x2F;10&#x2F;built-to-fail-the...</a>

It&#x27;s very telling that they say they learned of the depeg event on the 10th of May<p>It actually started on the 9th of May. So not only did they negligently invest 100% of funds in a single highly risky project while they marketed that they diversified risk, but they were also asleep at the wheel and missed the opportunity to salvage some of the terra before the depeg had gone too far

&gt; Stablegains is not accepting any new users or any new deposits on our platform. At this time, please DO NOT use your deposit addresses as any funds sent might not be recoverable.<p>It boggles my mind that people don&#x27;t see that the inability to block&#x2F;reject payments is a fundamental flaw of cryptocurrency.

Very beautifully, because they have used medium dot com to write their web log, the following text continues to appear at the bottom of the article:<p>&gt;Stablegains.com — 15% APY savings tool. Take control of your financial future. No hidden fees, no minimum balances, no commitment periods.

In related news, tether’s market cap dropped another $1B today. Seems like it has been happening in chunks like this every day. At least according to coinmarketcap.com. Down $10B since the Luna collapse, over 10%. Slowly, slowly, then all at once?

We should normalise signing with the names instead of &quot;Team Stablegain&quot;.

Hope there is jail time for investing people’s money into your Anchor protocol ponzi and not telling investors clearly.

I thought there was already a big announcement back towards the middle of the week. (Checks mail spool) OK, Thursday.

&quot;Now, as it becomes apparent that UST is not what we all had hoped it would be...&quot;

But it’s only string…

before they become unstable losses?

not that stable...

This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?