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How the crash of a “stablecoin” led to the loss of savings for thousands of people

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An illustration picture shows a gold plated souvenir cryptocurrency Tether (USDT) coin arranged beside a screen displaying a trading chart

An illustration picture taken in London on May 8, 2022, shows a gold plated souvenir cryptocurrency Tether (USDT) coin arranged beside a screen displaying a trading chart. - Tether (USDT) is an Ethereum token known as a stablecoin that is pegged to the value of the US dollar, and is currently the largest stablecoin with a market value of USD 83 billion dollars. (Photo by Justin TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)

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Sell-offs in the market for cryptocurrencies like bitcoin and ethereum continued this week. The rout followed another shock in May, when the value of terraUSD, a popular “stablecoin,” crashed.

Stablecoins are supposed to have stable value tied to the U.S. dollar, which is why crypto traders use them to move money around this volatile market.

But when terraUSD crashed, it wasn’t just traders who were hurt. Thousands of small investors were caught up in the meltdown, including people who put their money in Stablegains — a now-defunct crypto savings account company that promised returns of up to 15%.

Marketplace’s Matt Levin recently spoke to some of those people. He explains that they’re not the typical crypto investors you might think of and why they put their money into crypto in the first place.

You can read Matt’s original piece on the terraUSD crash here.

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