Contrary to what many thought, the UST stablecoin was on thin ice long before its epic crash. This was a disaster waiting to happen, held back only by the efforts of a few important players. Before I get into the mechanics of UST’s temporary salvation and eventual downfall, I’m gonna start you guys off with dramatic revelations from someone on the inside.
The Secret Lifeline
James Hunsaker, once an integral part of Jump Trading, turned whistleblower, explained to us the weird dealings that kept UST afloat. With a deep background in crypto through his tenure at Jump Crypto and later as a co-founder of Monad Labs, Hunsaker’s insights are kind of a big deal, you guys. Take this serious!
Jump Trading, a firm covered in mystery with its high-frequency trading strategies, turned into an unlikely savior for UST. Their crypto division went to great lengths, involving “aggressive trades” and big investments rumored to be in the hundreds of millions, to revive the collapsing stablecoin.
This intervention wasn’t born out of sheer altruism though, to be real with you. Jump had a huge stake in the game, due to an “important deal” aimed at boosting UST’s adoption. The deal was so big that when UST’s value began to wobble, Bill DiSomma, Jump’s co-founder, didn’t hesitate to take action. DiSomma, the puppet master, pushed for a massive buy-up of UST. This was a high-stakes gamble to re-peg the currency, a strategy that, for a time, actually seemed to work miracles.
The involvement and subsequent silence of Kanav Kariya and Bill DiSomma, who both invoked their Fifth Amendment rights when the SEC came knocking, was especially intriguing. The SEC’s probe into Terraform Labs and its dealings uncovered Jump’s shady role in the whole thing, revealing a billion-dollar profit from their engagement with Terraform.
The Illusion of Stability
What’s particularly audacious is how our boy Do Kwon brushed off the whole crisis. Kwon’s claims that UST could “automatically self-heal” were, at best, optimistic. At worst? A deception. This claim, though, led investors to a financial Armageddon, believing in the stability of a coin that was anything but. Hunsaker’s disillusionment with the whole affair became apparent when he took his concerns public, attempting to warn others on platforms like Reddit.
Yikes!
The personal stake Hunsaker had in UST, to the tune of $200,000, made his testimony real compelling. Despite harboring doubts about UST’s long-term viability, the allure of a 20% yield from Anchor Protocol was too tempting to pass up. So he decided to pull out just as the depegging commenced.
