Solchicks, a play-to-earn PVP (Player-vs-Player) crypto game, is reportedly affected by the TerraUSD (UST)/ Luna collapse in May 2022. This information was made known by ZachXBT, an anonymous crypto twitter handle who is known for exposing anomalies and scams within the digital asset space.
ZachXBT tweeted a leaked message between the CEO and COO of SolChicks and Catheon Gaming. According to him, the message revealed up to $20 million lost in treasury funds due to the implosion of the UST stablecoin.
When ZachXBT reached out to Lewis Grafton, Solchicks Chief Operating Officer, and he said that major investors knew about the situation, but the company did not disclose it to the public to avoid unnecessary concerns.
The UST collapse started a chain of negative events which eventually led to the downfall of many companies in the crypto industry. UST is a stablecoin that was supposed to be pegged 1:1 to the US dollar. Institutions holding UST expected that they would be able to exchange it for US dollars at any given time. Its eventual fall to below $0.006 in July 2022 left a hole in many companies’ balance sheets. Since SolChicks supposedly holds some UST, then the value of those holdings would have taken a 99.9% dive.
What is SolChicks?
SolChicks is a Non-Fungible Token (NFT) project built on top of the Solana (SOL) blockchain. It was founded by its current CEO William Wu in 2021. Its play-to-earn model made it popular with a lot of users.
Users need to own SolChicks NFTs characters to participate in the game. Active players can earn $CHICKS, the in-game token. Users can breed their NFTs and sell the offspring in the marketplace for profit.
On 24 Oct 2002, the new $CATHEON token was launched. According to their website, $CHICKS will be officially rebranded as Catheon Gaming’s universal governance and utility token which will be used across their entire ecosystem. This is an apparent effort to counter any FUD surrounding the project.
How Transparency Affects the Crypto Community
ZachXBT exposed SolChicks’ non-disclosure on the loss incurred in the UST collapse. While SolChick said that they have informed and discussed it with their biggest private holders, the smaller retail investors were left in the dark. This tactic was made to avoid any FUD (Fear, Uncertainty, and Doubt) that might hound the company. But this decision might produce the same effect that they are trying to avoid.
The crypto market is trying to find its way out of the ongoing bear market. A lot of companies like FTX, Celsius, and Voyager have already filed for bankruptcy. There was a time when these companies seemed to be unstoppable, but negative reports resulted in clients losing confidence. Investors tried to pull out their money as fast as they could which caused a crypto equivalent of a bank run.
Customers prefer to put their time and money into companies that are transparent with their investment decisions. Only time can tell if SolChicks’ decision not to disclose the supposed $20 Million UST exposure is the right move.
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