The well-known stablecoin project Basis is shutting down operations and returning what is left of the funds they raised to investors, The Block reported citing undisclosed sources with “direct knowledge of the situation.”
The shut-down reportedly follows regulatory problems, although details are sketchy at this point. According to sources, an announcement had to be made by Basis some time Wednesday evening. As of press time Thursday morning, no such announcement has been made.
Basis did not respond to a request for comment.
In April, Basis raised USD 133 million in a round backed by venture-capital firms boasting big names. GV, Bain Capital Ventures, Lightspeed Venture Partners, Andreessen Horowitz, Sky Capital, are only some of those names.
From the public information, it’s not clear at what development stage the project was before the news came out. This most recent update on their social channels is from June this year. However, there are still 23 job openings listed on the startup’s website.
“Basis is designed to keep prices stable by algorithmically adjusting supply. When demand is rising, the blockchain will create more Basis. The expanded supply is designed to bring the Basis price back down. When demand is falling, the blockchain will buy back Basis. The contracted supply is designed to restore Basis price,” the startup explained on its website.
The expected shut-down comes as a surprise to the cryptocurrency community, given recent press coverage of the rise of stablecoins, and the bright future that is expected for this category of cryptocurrencies. As Cryptonews.com has reported on repeatedly, stablecoins have seen strong growth this year, and this is expected to grow even more in the year ahead. This comes despite the fact that other digital assets have plunged in terms of their market capitalization this year.
Several members of the community have also shared their comments on the shut-down on Twitter:
1) CEO & Founder's bio says "he became obsessed with Bitcoin in 2012, and set up a mining rig in his dorm." Proof of OG is lowkey-CSW and easy to fake. It also has nothing to do with algo stablecoins. Why do we expect them to have deep insights on a new way to design money?
— Su Zhu (@zhusu) December 13, 2018
Including some, who appear to be skeptical towards the whole idea of Basis:
Today we learn @basisprotocol is shutting down. One year ago I wrote this about the project. https://t.co/vHbUCsOrDo
— Preston Byrne (@prestonjbyrne) December 13, 2018
I’m kinda pissed they are blaming US Govt instead of their frankly utterly nonsensical stable coin design. Algorithmic stable coin is a nonsensical concept. There is no law, though, that somehow prohibits it. Lame.
— TwitBot (@vasilipoupkine1) December 13, 2018
It's funny to think how many times I got shilled @basisprotocol. "It's going to be the huge, @PanteraCapital, @polychaincap, @a16z,… all invested in it so it's got to be good."
Really? Look at their ICO investments. They've performed horribly.https://t.co/YZIUn5c5sO
— WhalePanda (@WhalePanda) December 13, 2018
Watch Nader Al-Naji, CEO and co-founder of Basis, discussing stablecoins (until April Basis was known as Basecoin):