(Bloomberg) — Backers of TerraUSD (UST), the closely-watched algorithmic stablecoin that broke from its dollar peg, are struggling to win investor support for a rescue.
Talks stalled after big-name firms were approached by various individuals with connections to Terraform Labs in recent days, according to sources familiar with the matter who asked not be named because the discussions are private.
Do Kwon, CEO of Terraform Labs and UST’s chief evangelist, repeatedly alluded on Twitter to recovery efforts, saying on May 10 that he was “getting close” and encouraging his followers to “stay strong.” Kwon did not return a request for comment.
Terraform Labs said Wednesday it was unable to comment. “The TFL team is heads down right now so we would be unable to fulfill commentary requests at the moment,” a spokesperson told Bloomberg by email.
Read more: ‘Everything Broke’: Terra Goes From DeFi Darling to Death Spiral
Alameda Research, Celsius, Galaxy Digital Holdings Ltd., Jane Street, Jump Crypto, and Nexo were among those in these discussions, the people said.
Celsius tweeted that they were not involved, while Nexo confirmed to Bloomberg that they had been approached and had opted not to join the effort. Jane Street and Alameda declined to comment.
Jump Crypto, whose president Kanav Kariya is a member of the Luna Foundation Guard, also declined to comment. Jump Crypto is an affiliate of Jump Trading LLC. Galaxy did not return a request for comment.
Rescue Plans
The situation is fluid and could change based on market conditions, the people said. As of Thursday morning in London, UST was trading at around 58 cents. The Luna coin, which is part of the peg mechanism for UST, has tumbled 99% in the past 24 hours, complicating Kwon’s rescue efforts.
Read more: What Are Stablecoins? Why Did TerraUSD Go So Wobbly?: QuickTake
On Thursday, Terraform Labs tweeted that it proposed to to burn its remaining 371 million UST coins as part of the emergency plan to defend the token. In total, the current rescue plan entails eliminating 1.39 billion tokens, or 11% of UST supply. Much of those tokens had been accumulated in recent days to absorb the selloff in UST, Terraform Labs said.
Potential investors in one proposed deal from the Luna Foundation Guard were offered the opportunity to buy a related token, Luna, at a 50% discount to the spot price, Kumar Gaurav, the founder and chief executive of crypto liquidity provider Cashaa, told Bloomberg News earlier in an interview, adding his firm won’t participate.
The backers of the stablecoin were trying to raise about $1.5 billion to shore up the token, Gaurav said. The Block reported the fundraising plans on Tuesday.
The Luna Foundation Guard did not respond to repeated requests for comment.
(Updates with latest Terraform Labs proposal in 10th paragraph.)
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