Brazilian crypto exchange will reimburse all UST holders 1:1

brazil bitcoin

Brazil-based crypto exchange Nox Bitcoin has announced it will spend 620 million Brazilian reais to reimburse UST holders, crypto news channel Portal do Bitcoin reported.

The exchange will offset the difference between the current value of UST ($0.08) to ensure that each UST holder has $1 for every 1 UST held.

A refund for UST holders on Nox Bitcoin

Nox Bitcoin allowed users to wager their UST to receive a return like many exchanges worldwide. The exchange reportedly deployed the tokens on behalf of its customers through Anchor Protocol, which offered up to 20% APY when staking stablecoin. The exchange appears to have no insurance or guarantee that would require it to reimburse holders. Nox Bitcoin CEO Joao Paulo Oliveira said:

“Customers have trusted us with staking and we understand that their trust is far more valuable than anything else,” he explains. “We’re going to refund these users minus the costs we would have elsewhere, such as marketing.” (via Google Translate)

Only investors who bought UST before the de-peg will be reimbursed their tokens. Both LUNA and UST are still listed on Nox Bitcoin, with LUNA down over 99% and UST down over 90%.

The coins are still listed because the exchange is “waiting for the next steps to see which direction the market is headed”. There is currently a vote to decide whether the Terra blockchain should be forked to create a new LUNA coin alongside a Luna Classic (LUNC) coin.

Oliveira believes that Nox Bitcoin’s role is not to prevent “customers from exposing themselves to risk”, as it also “means preventing them from making money”. He believes that his role is to put together quality projects in which his clients can invest.

However, the reason for refunding its users cannot just be related to creating goodwill among its customers. As FatMan of the Terra Research Forum noted:

“Brazil’s consumer law is quite strict and penalizes companies that lie to customers or falsely represent risks. Let’s see how many courts come to the same conclusion in the coming days as exchange lawsuits pour in. All this is far from over.”

What happens to forked coins?

There is currently no information on what will happen to coins created as a result of the upcoming fork of the Terra blockchain. In the case of exchange-owned wallets, all coins issued as a result of a blockchain fork are distributed to the exchange’s wallet. It is then up to each exchange to distribute those coins to individual investors.

Whether users reimbursed by Nox Bitcoin will also receive the new LUNA coins issued to both “pre-attack” and “post-attack” holders of UST will be interesting to watch. One argument is that splitting the Terra blockchain and assuming it retains its pre- “attack” value inflates the money supply by up to $16 billion.

Suppose investors have repaid their UST holdings and receive new LUNA tokens of equivalent value. In that case, the question arises: where does this added value come from? Watch out for the end of the current Terra vote, scheduled for May 27, 2022, if the proposal is passed.

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