Nox Bitcoin, a cryptocurrency exchange in Brazil, has taken the unprecedented step of using its own funds to refund customers for their TerraUSD coins at the full rate.
Following local media’s report on May 20, the Nox Bitcoin exchange has refunded all UST holders at a $1 rate with Tether’s USDT.
The report stated that the crypto brokerage firm paid 620,000 Reais ($127,000). The exchange paid the amount to compensate all its customers who lost money due to the Terra ecosystem collapse.
Related Reading | Ripple Price Falls Below $0.43 As Bears Take Control Of The Market
“FatMan” of the Terra research forum commented in a tweet on May 20 that the decision might set a global precedent for other crypto exchanges.
The tweet stated;
This is fairly significant. A Brazilian cryptocurrency exchange has refunded all UST holders at a 1:1 rate with USDT. Likewise, this case may be used as key precedent to argue that exchanges are liable for UST losses. If tortious misrepresentations were made.
UST Back At $1 For Those Lucky Ones
The exchange stated that it would refund the customers the amount of the difference between the present rate for UST and the dollar peg it collapsed from. This implies that a holder of 100 UST at $0.06 will receive a refund of 94 USDT.
According to Nox Bitcoin CEO Joo Paulo Oliveira, the firm is not responsible for bearing clients’ losses from investing in certain currencies on its platform. Yet, they decided to intervene to ensure their customer’s trust.
Clients have trusted us with staking and we understand that their trust is much more valuable than anything else. As a result, we’re going to reimburse these users minus the expenses we’d have elsewhere, like marketing.
The news came as a relief and brought positiveness to the cryptocurrency space. However, the decision by the Nox Bitcoin exchange reflects the Brazilian customer protection regulations.
The exchange also offers staking services, such as Anchor Protocol, which UST heavily uses. The DeFi protocol offered up to 20% APY on UST staking and was primarily seen as being instrumental in its collapse due to these unsustainable yields.
People are now waiting to see what happens next regarding listing UST and LUNA. “It is possible that this will no longer exist in the near future,” stated Oliveira before adding, “but you never know what can happen in an unpredictable crypto market.”
Related Reading | Cosmos (ATOM) Skyrockets 12% Following Bitcoin And Ethereum Recovery
According to Tradingview, UST is trading at $0.067 with a 1% increase at the time of writing. The “unstablecoin” has withdrawn 93% from its peg. And it is unlikely to get back to it without major intervention such as a TerraForm Labs hard fork.
Also, TerraForm’s LUNA has dumped a similar amount. As a result, the coin is trading at $0.00020 with a market cap of $1.35 billion and 6.5 trillion tokens in circulation.
Featured image from Flickr, and chart from Tradingview.com