Following the recent fiasco, in which Terra and its two native cryptocurrencies plummeted in value, the organizations behind the project said they will seek outside help. One of the first legacy financial companies that stepped up to offer assistance is the Swiss asset manager – GAM Holding AG.
- The press release by the 40-year company reads that it has begun negotiations with Terraform Labs to “help support its Luna stablecoin (UST).”
- GAM said it is “expected” to invest between $2 billion and $3 billion to “absorb excess supply of UST during its current selloff,” which should revive the UST peg to the US dollar.
- UPDATE: A day after the press release went live, the Zurich-based company released another one, claiming that the first was false. Without providing a lot of details on what had transpired, GAM said it had begun investigating the “source of this story and how it came out.”
- CryptoPotato reached out to Charles Naylor, GAM’s Head of Communications and Investor Relations. He confirmed that the initial PR was fabricated but they had no information on how that information went out.
- As reported earlier, the events of last week brought not only Terra and its cryptocurrencies down but the panic spread across the entire market.
- Due to the algorithmic nature of UST and its relation with LUNA, once the stablecoin started to lose its peg against the dollar, investors began taking advantage of the system by arbitraging it with LUNA.
- This led to massive selling pressure on the latter, which propelled a mind-blowing price slump. LUNA traded above $80 a week ago, but it sits at $0.000055 as of writing these lines. Many exchanges have halted trading, and Terra announced (another) blockchain stoppage hours ago.