"Stablecoins, Pyramid Structure" IMF Managing Director Criticizes Luna and Terra Incident

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), criticized the Korean cryptocurrency Luna and the stablecoin TerraUSD (UST) on the 23rd (local time), calling the issuance structures of the two coins a 'pyramid' unsupported by assets amid their crash.

According to CNBC, Georgieva made these remarks while attending the World Economic Forum (WEF) Annual Meeting (Davos Forum) held in Davos, Switzerland, stating, "There has been major turmoil in the stablecoin sector."

She said, "Stablecoins are stable at a 1-to-1 ratio (against the dollar) if backed by assets," adding, "If they are not backed by assets and promise a 20% return, that is a pyramid scheme."

She also expressed concern, asking, "What happens in a pyramid scheme?" and said, "Eventually, it shatters and collapses." Luna and UST, issued by Terraform Labs, have a structure backed by collateral value. When UST fell below 1 dollar, Luna also plummeted alongside it.

These remarks attracted more attention as they came after Christine Lagarde, President of the European Central Bank (ECB), said that cryptocurrencies "have no value."

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