Luna | UST potentially this cycles Bitconnect (Ponzi Scheme)Lets start
2014 we had the famous OneCoin Scam
2018 we had the famous Bitconnect Scam.
2022 we have the new Luna algorithmic stable coin in this case its Luna/UST (Very similar to the Bitconnect price movement/chart)
Before I get into why I'm suspicious of Luna lets talk about what these all have in common that makes it so dangerous.
1. They all have some type of yield return you're unable to get anywhere legitimately.
2. These scams always have initial investors that have gotten in very early probably before they knew what they was even purchasing, this causes a massive MLM ladder that the "wealthy" owners of these scams start to promote and completely believe its not at all possible its a scam like some sort of trance because the money and returns are just that good.
3. Come the final stage now the MLM has spread to enough smaller investors that has spiked the price continuously to the point where the some initial investors might want to take profit, this is where they always collapse in the end.
Red flags with Luna
The founder has no experience in money markets and seems to be a gamer without any high degree of financial education that people are blindly following.
The supposedly decentralization of the UST is connected and functioning based on what the (Luna foundation guard) and (Terra form labs) are doing it sounds very much like a reserve banking setup claiming to be decentralized.
The main driving force behind UST's growth is synthetic not organic, once again a platform called Anchor Protocol is offering a yield return that nobody else can provide currently requiring the centralized Terra form labs to top up capital to its reserves in order to payout people earning.
How does this capital get topped up?, the Luna owned by Terra form labs since conception gets sold to be sent to Luna Foundation Guard that then gets added to the reserves of Anchor Protocol, increasing UST demand.
What happens if Anchor reserves empty and Anchor's yield return has to drop back down to reality? stop you're not allowed to ask this.
What happens if UST's marketcap passes Luna's marketcap during a bear market? stop you're not allowed to ask this.
What happens when the initial rich investors cash out of Luna or staked UST back into a stablecoin like USDT or USDC? stop you're not allowed to ask this.
What happens when the SEC finally orders Terra form labs to provide a balance of real cash reserves or eq? stop you're not allowed to ask this.
Final thoughts for the future, I believe CBDC's will work along side stable coins such as USDT, USDC as they will be regulated UST will not be regulated and the SEC/ US government is not going anywhere.
Below I have provided a chart of Bitconnect that directly shows the same behavior and movement up till the collapse.
www.financialsamurai.com
