Billionaire investor Bill Ackman has bashed the collapse of the Terra ecosystem, calling it “the crypto version of a pyramid scheme.”
“Investors were promised 20% returns backed by a token whose value is driven only by demand from new investors in the token,” the founder and CEO of Pershing Square Capital Management tweeted. “There is no fundamental underlying business.”
The 20% returns mentioned refer to the high yield earned on Terra’s highly-popular Anchor Protocol application. Today, those rates have dropped to 18% and are expected to drop again on June 1.
Ackman also criticized LUNA for creating artificial demand by limiting the supply through a vesting schedule.
“LUNA appreciated by attracting more followers and by limiting the supply of tokens through a vesting schedule,” the billionaire investor wrote. “It collapsed once the supply of sellers of Luna overwhelmed the buyers.”
Ackman did, however, go on to laud blockchain technology, calling it “brilliant” and that it has “enormous potential.”
But if the industry doesn’t get its act together, he argued, this potential may be missed.
“The crypto industry should self-regulate away other crypto projects with no underlying business models,” Ackman tweeted. “Hyping tokens that are not supported by businesses that create value will destroy the entire crypto industry.”
