Citing an insider scoop, Autism Capital alleged that Abracadabra accrued around $12 million in bad debt as a direct result of Terra’s sudden drop, which has been extensively refuted by founder Daniele Sestagalli.
Magic Internet Money (MIM) is a US dollar-pegged stablecoin of the Abracadabra ecosystem. It joins the surging list of tokens that are losing their $1 value amid an untimely crypto winter. The abrupt de-pegging of the MIM token started around June 17, 7:40 pm ET, which saw the price of the token plunged to $0.926 in just three hours.
TerraUSD (UST) and Terra’s LUNA death spiral affected the investors and hurt many crypto projects, including Abracadabra’s MIM token ecosystem, as purported by Twitter handle @AutismCapital.
While citing an insider scoop, AutismCapital stated that Abracadabra accrued around $12 million in bad debt as a direct result of Terra’s abrupt drop “because liquidations couldn’t happen fast enough to cover the protocol’s MIM liabilities.”
We have a scoop from one of our associate autists: MIM (Magic Internet Money) may be nearly insolvent. MIM is one of the larger stablecoins, with a market cap of ~$300M.
We can't believe that a project called Magic Internet Money has been acting irresponsibly either.
— Autism Capital 🧩 (@AutismCapital) June 17, 2022
The founder of Abracadabra, Daniele Sestagalli, nonetheless, refuted the allegations of insolvency by guaranteeing to have adequate funds to pay back the piling debts; which has been mainly attributed to the plunging MIM prices. Sestagalli said:
“[The Abracadabra] Treasury has more money than the debt and $CRV are valuable for the protocol.”
Magic Internet Money Facced By A Bad Debt
Doubling down on his stand, Sestagalli also publicly shared the treasury address holding $12 million in assets. He requested all the concerned investors to validate the same using available on-chain data.
On the flip side, Autism Capital said that Sestagalli’s bad debt was created about five days ago and shared this screenshot that shows his conversation about the same on MIM’s Discord group.Buy Crypto Now
While risks of insolvency continue threatening the Abracadabra protocol, either via the MIM treasury continuing to dump in value or more bad debt created, investors are now advised to keep track of the huge market fluctuations, volatility, and do their own research (DYOR) before making any investment decisions.
On June 13, the Stablecoin protocol USDD’s price dropped to $0.97 on major crypto exchanges.
If you subtract $TRX, it turns out collateralization ratio is currently 73%
— Res ®️ (@resdegen) June 12, 2022
To assist during the market fluctuations, the Tron DAO Reserve confirmed that it got 700 million USD Coin (USDC) to defend the USDD peg. As a result of that fund infusion, the developers behind the stablecoin said that the collateralization ratio of USDD is now boosted to around 300%.