Billionaire Bill Ekman called Terra a cryptocurrency pyramid – Bits Media

The founder and CEO of the American hedge fund management company Pershing Square Capital Management reproached the Terra team for creating artificial demand for its product.

Bill Ackman (Bill Ackman) stated on his Twitter, that one of the main reasons for the collapse of Terra is business pyramid scheme. Investors were promised a 20 percent return, token-backed, the cost of which is determined by demand from new investors. In fact, Ekman says, Terra has violated a fundamental business principle.

The billionaire criticized LUNA for creating artificial demand by limiting supply using a vesting schedule - where investor tokens are locked for a certain period, and then evenly distributed. In the case of LUNA, the blocking period could take from 10 to 18 months.

«LUNA appreciated that, which attracted more users and limited the supply of tokens in accordance with the vesting schedule. therefore, when the supply of LUNA sellers exceeds the number of buyers, she collapsed", – Ekman explains.

but, with all the mistrust in such business models, Blockchain is a brilliant technology with huge potential, says the billionaire. However, if the industry does not get its act together, this potential will fade away. The crypto industry must learn to independently regulate other cryptocurrency projects, not built on traditional business models, Ekman says:

“Promotion of tokens, which are not supported by organizations, producing something valuable, will destroy the entire crypto industry".

On Wednesday, 18 june, Terraform Labs' team of lawyers and compliance specialists quit almost entirely amid the collapse of UST. The company's legal affairs are now handled by a third-party firm.