Justin Sun Mocks Do Kwon as He Declares a 200% Collateralized Ratio for $USDD

Justin Sun claims his $USDD stablecoin is overcollateralized by 200%.

Justin Sun and Do Kwon sitting on red backgorund
  • Justin Sun claims his $USDD stablecoin is overcollateralized by 200%
  • Sun mocks Do Kwon’s infamous tweet before the collapse of the Terra ecosystem
  • Some Twitter users delve deeper, and the data doesn’t necessarily back up Sun’s claims

Justin Sun has taken to Twitter to reassure investors that his stablecoin $USDD is overcollateralized by 200%. In the process, he mocks an infamous Do Kwon tweet.

Justin Sun mimics Do Kwons now deleted ‘steady on lads’ tweet as he adds more collateral to back the $USDD stablecoin. Source: Twitter

The situation is reminding community members of the confidence displayed by Do Kwon before the collapse of the Terra ecosystem in May.

Do Kwon Tweet

A screenshot of the now deleted tweet by Do Kwon, as he tried to reassure investors that his capital would repeg $UST to the dollar. Source: Twitter

Some Twitter users are not convinced by Sun’s announcement, with many claiming that the information is misleading. Users also joked that the mocking of Do Kwon was tempting fate and that $TRX would be the next cryptocurrency to collapse in a catastrophic fashion. 

Analysis by Twitter user @CryptoWilfred shows that significant funds would need to be sold in order to repeg $USDD to the dollar. Source: Twitter 

It’s not surprising that investor confidence is waning. New $USDD lows are being recorded and it’s been over a month since $USDD had parity with the dollar.

Twitter user @YJKim_Crypto, along with others, points out the misleading collateral figures. Source: Twitter

Sun’s reassurance has not been well received. Community members point out that the collateral figures come from $TRX being valued at a certain price point. If the cryptocurrency were to drop in price, the collateral value would be affected. 

It is noted, however, that if $TRX suffered a 50% loss, then $USDD would still be collateralized by 100%. It’s important to ‘zoom out’ in these scenarios, as the cryptocurrency market is known to suffer such drops in the face of ‘black swan’ events.

On the Flipside

  • Sam Bankman-Fried also had a similar risk appetite, claiming he only ever accounted for price drops of 30%. His exchange is now insolvent. 

Why You Should Care

$TRX has been under scrutiny as a stablecoin following the collapse of FTX. Investors should be cautious when placing trust in leaders in the crypto community. Although Sun’s $USDD may end up a safe investment, the mounting data and lack of investor confidence is as good a reason as any not to believe everything posted online. This is especially true when investing your funds into experimental protocols. 

SBF also echoes Do Kwon in an announcement regarding his potential new business:

SBF Eyes New Business to Repay Creditors: Do Kwon 2.0?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Zack Dadfar

Zack is a Crypto writer and trader, having been trading digital assets since 2017. Throughout time his portfolio and knowledge has grown, leading him down the writing path. With multiple project launches under his belt (NFTs and DeFi), and a degree in English Literature, Zack is excited to be combining his skills and passions to write for DailyCoin readers.