- Republican Senator Pat Toomey said Terra has the potential to be a fraudulent project.
- The US legislator was based on what happened recently with the price collapse of the Terra, UST and LUNA tokens.
- Toomey also alleged that Terra offers dubious technology and promised huge returns to its investors, while in reality its tokens crashed.
Since the price of the Terra project tokens fell to zero, this scheme has given much to talk about, occupying the front page of specialized media in Bitcoin and other cryptocurrencies in the last month. As a result, many figures inside and outside the field have shared his opinion, with a US senator being the most recent to share his perspective on the matter.
This is the US legislator Pat Toomey, representative of the state of Pennsylvania in the United States Senate, who on Monday, May 23, opined that the Terra project has the potential to be a scam, and that all its investors could be victims of fraud. Toomey shared these remarks with Barron’s, the world’s leading investment publication for a century.
Toomey’s remarks were based on the price crash of TerraUSD (UST) in early May, a token that was offered at an alleged 1:1 parity with the US dollar, being offered to investors as a “stablecoin” or ” stable currency. Alongside UST, the Terra token (LUNA) was also developed and managed by Terraform Labs, and also plummeted to zero this month, after hovering around $100.
Toomey noted that the collapse of TerraUSD raises the possibility that investors may have been swindled by the company behind its management, after it lost its peg to the US dollar, fueling a billion-dollar capital outflow from the cryptocurrency and token market.
Republican Senator Toomey indicated that Terra may be a fraudulent project, also referring to what happened with the LUNA governance token, explaining that with this asset Terraform Labs promised high profits to its investors, while promoting a “very dubious technology”, asserted the legislator.
Like Toomey, hedge fund manager Bill Ackman also took the view that Terra is a typical pyramid scheme. Ackman added that projects like Terra pose a threat to the cryptocurrency space and its investors.
As reported by the Market Times in recent days, it seems that the Terraform Labs company would be on the radar of the South Korean authorities, presumably due to unfulfilled tax duties and the collapse of the market for its tokens. It also highlights that its CEO, Do Kwon, asserted that the company has no pending tax obligations in South Korea, a country that the company left shortly before the collapse of the price of the LUNA and UST tokens, by “pure coincidence”, Do Kwon stated.
