A Brazilian cryptocurrency exchange has taken the unprecedented step of spending its own funds to refund customers of TerraUSD coins at maximum rates.
According to local media reports on May 20, the Knox Bitcoin Exchange will offer all UST holders USDT in Tether.
According to the report, the crypto brokerage company has spent 620,000 Reais (approximately $127,000) to reimburse all customers who suffered losses as a result of the Terra ecosystem collapse.
“FatMan” of the Terra research forum commented that this move could set a precedent for global exchange.
“This case can be used as a key precedent for alleging that the exchange was liable for UST losses if it made unlawful misrepresentations.”
Tera back to $1 for this lucky few
The exchange said it would refund the difference between the UST’s current exchange rate and the collapsed dollar peg. This means that anyone holding 100 UST at a price of $0.06 will get a refund of 94 USDT.
Knox Bitcoin CEO João Paulo Oliveira told the media that the company has no obligation to bear losses for customers investing in certain currencies on the platform, but has decided to intervene to ensure customer trust. He added (translated):
“Customers have trusted us with their staking and we understand that their trust is more valuable than anything else. We will reimburse these users less money they would have spent elsewhere, like marketing.”
Knox Bitcoin also offers staking services, such as the anchor protocol popularly used by UST. The DeFi protocol provided up to 20% APY in UST staking, and these unsustainable returns appear to play a major role in the collapse.
Oliveira added that he is waiting to see what happens next with the UST and LUNA listings. “The Terra ecosystem may no longer exist, but the cryptocurrency market is unpredictable and anything can happen, including the ultimate revival of the Terra ecosystem,” he added.
UST fell further
As of this writing, UST has dropped to $0.056, dumping an additional 23% on the day, according to CoinGecko. The ‘unstable coin’ has now retreated 94% from pegging and is unlikely to return without major interventions such as a hard fork from Terraform Labs.
LUNA dumped a similar amount priced It has a market cap of $0.00010793 and a market cap of $688 million, with 6.5 trillion tokens in circulation at the time of writing.
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