The fact that they promised to redeem some UST deposits 1:1 with the dollar after the peg had failed, presumably using other customers funds tells me they were not just a custodian.
I wouldn't be surprised if friends of the founders got a half hour heads up before that 08:55 tweet... So that they could withdraw their money at full value.
You are moving the goal post here. 15% is not 0.75%. The probability of returning 15% consistently is significantly lower than 0.75%.
If you guaranteed 0.75% to your customers and do not deliver, then you are liable. What you are describing is arbitrage and not what this scenario is about.
From what I can tell they weren't promising a guaranteed return. Although their landing page used to not say "up to 15%" they had a section in their knowledgebase saying 15% APY is just an upper bound.
The fact those returns aren't guaranteed is a big part of why they are so high to begin with. Credit card debt is unsecured (no collateral put up to be seized in the event of a default), creditors can walk away from the debt and the issuer will never receive a cent.
Most marketing is arguably fraudulent. I don't think these scams are good at all but part of me really wishes there were more just to force people to think twice when they see marketing from eg Apple or Tesla.
EDIT: s/advertising/marketing/g I don't really think of them as separate but that's a good point.
They added a much more reasonable risk explanation after the event happened. Click the link that the submission is. Look at the before and after pictures
Where do they specifically exclude the risk of depegging?
From their website :
"As Stablegains is not a traditional US bank, the funds are not secured by the FDIC. While we aim to make every effort to understand and mitigate everything that can possibly go wrong, there is still a non-zero risk you can lose your deposit. Our advice is to diversify and never invest all of your savings in a single place."
Of course they are selling themselves as pretty safe, and I'm sure they thought they were.
But as you mention, it's like the 10th stablecoin to drop, so it's not exactly a surprise that crypto is a risky investment in any case.
If you’re taking this from their Twitter thread after this whole situation happened, that is definitely not the same thing as an upfront risk factor when collecting investments from people.
For the sake of being a pedant, your statement is incorrect: the U.S. federal fund rate was 15% in 1981, making CDs and T-bills yield 15% APY for the products bought that year. So that kind of return has a place in reality. Granted, those were different times, different economic climate and exceptional fed actions. What you probably mean is that promising anything that exceeds SOFR + say 2 percentage points has a risk premium that should be disclosed.
It does when the poor decision is to run a ponzi scheme
e: ah, only acting as the middlemen between the end user and a ponzi scheme. Probably that'll give them and their VC backers enough plausible deniability to avoid being arrested.
It's obfuscated by splitting the components into multiple cryptocurrencies with multiple actors, but that's what's going on. People were staking UST for 19.5% returns, and if you cut through the fluff, those returns came from later people putting their money in hoping to get those returns themselves. (and because UST was a stablecoin those returns were (ostensibly) in dollars, not just inflation of the coin value)
You just described banks. Banks take deposits & lend the money out at a higher rate. This is what anchor protocol was all about. Pay high interest, and lend at even higher interest.
People like throwing the word scam around a lot, too. I don't think this was a scam. It was simply a shit financial product based on deluded fundamentals.
