TerraUSD Backers Seek $1.5 Billion Rescue, Cashaa CEO Says

The backers of the TerraUSD algorithmic stablecoin are trying to raise about $1.5 billion to shore up the token after it crashed from its dollar peg, according to the founder of a firm that was approached about the deal. 
Investors in the proposed deal will be able to buy the Luna coin at a 50% discount to the spot price, Kumar Gaurav, the founder and chief executive of crypto liquidity provider Cashaa, said in an interview. Luna, the token that’s part of the peg mechanism for TerraUSD, has tumbled about 95% in the past 24 hours. 
The plunge in TerraUSD, or UST, has reignited the debate over algorithmic stablecoins, a subject of controversy within the crypto industry. It crashed to around 45 cents on Wednesday, days after breaking an intended 1-to-1 peg to the dollar, as confidence in the project evaporated. 
Cashaa is among prospective investors that received the proposal from the Luna Foundation Guard, Gaurav said, adding that his firm won’t participate. Investors will be subject to a one-year lockup and a monthly “linear vest” over 12 months, he added. The LFG didn’t immediately respond to requests for comment.
 
“UST’s collapse is the biggest threat to crypto right now,” said Gaurav. “It has massive ramifications across the entire industry. If UST stays below peg for enough time, it could cause even more Luna to be minted and sold to the market, increasing the risk of UST’s solvency.”
The Block reported on the fundraising plans earlier. 
Broader crypto markets showed few signs of getting caught up in the turmoil on Wednesday, with stablecoins like Tether holding their pegs and major tokens including Bitcoin and Ether trading higher.