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471;
Ntamugabumwe Victor
Kampala, Uganda
414
1775
11
4
In
Blockchain and Cryptocurrency
•
2 min read
•
Dec 23, 2022 06:59a.m.
The 2022 Blockchain Year. A legal perspective of the Lows
In this insight I sum up this year to look at two events. - The Fall of the #TerraEcosystem. - The collapse of #FtxExchange . A case for Developer liability and Consumer and Investor Protection. PART 1 1. The Fall of the Terra Ecosystem #context Founded and Launched in the #TerraLabs in 2018 by Do Kwon and others, it operated on the Cosmos SDK a network that allows other people to develop their own Blockchain products. We look at three components (relevant), the Luna Token, the UST token and the Luna Foundation Guard. The tokens were native to the network and were stable coins with the UST hovering over the price of the dollar. Unlike other stable coins backed by fiat or physical goods, the Terra tokens worked under an algorithmic smart contract. Where the price of the UST increased, more Luna tokens would be burnt to create UST and vice versa to keep the coin stable this was automatic using the algorithmic smart contract. With a market cap of 15Billion $ in March 2022. The UST got depegged from the dollar and didnot rise again leading to the collapse. the Luna Guard Foundation failed to stabilize the Eco system. #Cryptolegalities It should be noticed that this seemed to be a perfect calculation by a developer to ensure that the system was stable using a written code smart contract. This is where we discuss Developer Liability. From the concept in tort negligence - the neighbor principles. A developer's neighbor is the user of the product. The final consumer. Developer liability has been applied in construction law and other areas. it should be applied to #blockchain #crypto PART 2 The Collapse of FTX Crypto Exchange. #context Founded in May 2019 by Sam Bankman Fried and others in the Bahamas, FTX operated as a centralized crypto exchanges but aswell offered a Blockchain token called the FTT and made various deals and collaboration using it's Decentralized Autonomous Organisation the FTTDAO. On 2nd Nov. 2022, CoinDesk published an article with various allegations on FTX and it's sister company's (Alameda Research founded by Sam Bankman Fried) balance sheet. It alleged that Alameda's Balance sheet comprised of almost half of the FTT in circulation and made a conclusion that Alameda Research was still in operation using the funds from FTX's Depositors. The next day Bainance's CEO tweeted that they intended to transfer all their FTT assets back to FTX. This led to panic, various withdrawals that FTX could not implement and hence a liquidity crisis. A story of unfaithful love! FTX filed for Bankruptcy #cryptolegalities John Jay Ray's Affidavit in support of the bankruptcy at paragraph 5 stated, "Never in my career have I seen such a failure of corporate controls and such complete absence of trustworthy financial information as accrued here." This is why we need corporate controls in financial matters. Summarily these are principled on #consumerprotection #investorprotection Crypto 2022!!!!!
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