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Luna Bailout Terms Put a Crypto Spin on Death-Spiral Financing

  • Plunge of UST, Luna has project scrambling to raise funds
  • ‘It’s a crazy time in the market,’ Securitize Capital CEO says
Terra's Luna token value on the Coinbase website on April 8, 2022. 

Terra's Luna token value on the Coinbase website on April 8, 2022. 

Photographer: Tiffany Hagler-Geard/Bloomberg

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From borrowing and lending platforms to synthentic equities to simply trying to build a stable proxy for the US dollar, cryptocurrency projects have long attempted to reimagine traditional financial vehicles for the age of the blockchain. 

Now, after the values of both the Luna and TerraUSD coins have collapsed in dramatic fashion, something that in broad strokes resembles an old Wall Street tactic is being revived in hopes of saving the project behind them -- death-spiral financing -- as well as another money-raising tool favored by strapped companies, a PIPE, where stock is sold to institutions at below-market prices.