Galaxy Digital Holdings Ltd BRPHF CEO Mike Novogratz got inked with a Terra LUNA/USD tattoo at the beginning of the year as the cryptocurrency soared.
Now that the crypto is essentially worthless, what are the Galaxy Digital CEO's plans for the tattoo?
What Happened: The tipping point for the crypto markets was the collapse of TerraUSD UST/USD. This so-called stablecoin was supposed to remain at $1, however, Terra lost its peg to the U.S. dollar and fell sharply, bringing the rest of the crypto market down with it.
Novogratz talked about the collapse Thursday on CNBC's "Squawk Box."
"The original reason for crypto was more transparency, and ironically we had centralized organizations, you know, on top of all the crypto, and that's where most of the problems showed up," Novogratz said.
In the case of Luna, users could acquire TerraUSD by burning $1 worth of the Terra (LUNA) token, which would then allow an individual to mint one UST. Following the collapse, Sam Bankman-Fried, founder and CEO of cryptocurrency exchange FTX, explained what was behind the process.
"So what was actually backing the 20 billion UST that were in circulation was the ability of the market to bear a lot of new minting of Luna tokens and pay up for them. And that's a volatile thing," Bankman-Fried said.
Novogratz explained why there was a ripple effect through the rest of the crypto market.
"What we saw, and what hopefully doesn't repeat itself next cycle, is a horrific breakdown in risk management at companies that you would have assumed would have understood what risk management was," he said.
"It was just greedy. People got into UST because they were providing 18%. You don't get 18% for no risk."
What About The Tattoo? When asked if Novogratz still had the Luna tattoo from January, he confirmed that it's still on his arm and he plans to keep it there.
"It's a good reminder that you are not always right," Novogratz said.
Photo: @novogratz from Twitter.
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