At this point, it'll likely come as no surprise that the CEO of Terra creator Terraform Labs, Do Kwon, was also behind another failed algorithmic stablecoin called "Basis Cash", which launched on ethereum in 2020.
Basis Cash (BAC) also "sought to maintain a $1 peg through code, not collateral," CoinDesk, who broke the story, wrote yesterday. BAC ultimately failed, the report notes, never getting to dollar parity and eventually crashing to "well below 1 cent" where it trades now.
CoinDesk called stablecoin Terra's recent collapse "history repeating".
Hyungsuk Kang, a former engineer at Terraform Labs, confifmed that Basis Cash was a side project from some of Terra's creators, including Kwon. A second anonymous employee referred to Kwon as pseudonymous BAC founder “Rick Sanchez”.
Kang told CoinDesk: “Basis Cash wasn’t tested at the moment, and we weren’t even sure” it would work, Kwon “wanted to just test it out. He said that this was a pilot project for doing that.”
The outlet also reviewed Basis Cash Korea chat logs where Kwon appears to refer to himself as "Rick".
Basis Cash raised $133 million before closing in 2018 due to regulatory concerns. It had described itself as a “Decentralized Stablecoin with an Algorithmic Central Bank.”
In 2020, "Rick" talked about bringing it back from the dead on Telegram: “Yo degens, anyone remember what Basis was? It was one of the early ‘DeFi’ algorithmic stablecoins with high ambitions, but it was shut down due to SEC-related risks. Today we’re bringing Basis back from the grave.”
“In the long term, we look forward to seeing Basis Cash be used widely as a base layer primitive such that there is organic demand for the asset in many DeFi and commercial settings,” he wrote.
CoinDesk didn't take the decision to "dox" Kwon lightly, writing:
Revealing the real name behind an online pseudonym (even a long-discarded one) is not a decision CoinDesk takes lightly. Our default position is to respect the privacy of pseudonymous actors with established reputations under their well-known handles unless there is an overwhelming public interest in revealing their real-world identities.
In this case, there is such public interest as Kwon’s UST stablecoin death spirals, wreaking havoc across the broader cryptocurrency market. Amid this precarious situation, investors deserve to know that UST was not Kwon’s sole attempt at making an algorithmic stablecoin work.
A separate op-ed on CoinDesk called Do Kwon the "Elizabeth Holmes of crypto".