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Billionaire investor Bill Ackman says Terra's 'algorithm' sounds like the 'crypto version of a pyramid scheme'

Added 05-18-22 04:14:02am EST - “Ackman tweeted his disapproval of Terra, suggesting that the crypto industry should "self-regulate" projects with "no underlying business models."” - Businessinsider.com

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Posted By TheNewsCommenter: From Businessinsider.com: “Billionaire investor Bill Ackman says Terra's 'algorithm' sounds like the 'crypto version of a pyramid scheme'”. Below is an excerpt from the article.

Billionaire investor Bill Ackman has weighed in on the implosion of the Terra "stablecoin," saying he thinks of it as a "crypto version of a pyramid scheme." 

Ackman, the CEO of Pershing Square Capital Management, expanded on this stance in a series of tweets on Tuesday.

"When I read about the 'algorithm' of Terra, it sounds just like a crypto version of a pyramid scheme," Ackman wrote. "Investors were promised 20% returns backed by a token whose value is driven only by demand from new investors in the token. There is no fundamental underlying business." 

Ackman's remarks come after last week's staggering crypto crash, which saw hundreds of billions of dollars worth of cryptocurrency being wiped out. The crash was wrought in part by the collapse of Terra, which was pegged to the US dollar. The "stablecoin" went into freefall after being "depegged" from the dollar, tumbling to as low as $0.30 on Wednesday.

Terra's free-floating sister cryptocurrency, Luna, has also plummeted more than 97% in what analysts called a "death spiral."

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