French JustMining in turmoil

In a press release, the French cryptocurrency specialist announces “significant implications” for its lending product.

The wind of panic is blowing through the stablecoin market, and the first effects are beginning to be felt. Just Mining, a French company that offers crypto-currency investments for depositors among others, has just paid its price. In a press release released on Wednesday, Just Mining said “this development has important implications” for its loan product.

In fact, Just Mining announces that its lending product is exposed to UST by almost 40% (39.58% to be exact). However, with the price drop of the latter, some customers will lose part of their bet. The company offers them two options: take their funds and incur losses, or leave them in the hope that the price of UST will rise to the level of the dollar. If the user decides to exit the position immediately, the estimated loss calculated based on UST will be reported immediately prior to the final check:

“For example, with UST at $0.52 (05/11/22 at 16:30) and risk at 39.58% of the loan, the client under these conditions will confirm a loss of 18.98% of his position,” Just Mining clarifies .

For those who wish to stay and bet up, “you agree to take the risk of losing up to 39.58% of your portfolio if UST falls to $0. On the other hand, if the price of the UST returns to its original value, your losses will disappear (or decrease) if it manages to restore parity with the dollar.

This Thursday around 9:50 am, UST was worth $0.6, 40% less than promised parity with the dollar.

In its press release, Just Mining clearly states that there are 3 types of risk in lending products:

  • volatility of the underlying asset (here USD)
  • risk of technical failure of the protocol used
  • the risk of parity between a stablecoin and its underlying asset, the so-called “de-peg” or “loss of parity”

“Today, the fall in the price of UST puts us at risk number 3: the loss of its parity with the US dollar,” sums up Just Mining.

Case $1250

For some users who thought they were safe and not exposed to UST, this came as an unpleasant surprise. Indeed, as the company points out in its press release, “No matter what stablecoin you invest in on our platform, your capital is divided into different stablecoins,” including UST.

It is clear that when a user subscribed to stablecoin A, JustMining could convert it to A, B, C, D… This process, however, was specified in the general conditions of sale.

In order to prevent the loss of its customers with all its means, Just Mining guarantees coverage of up to $1,250 to its affected customers, “thus providing full coverage for 73% of our customers using this service and partial coverage for the rest,” according to the press. release. “An exceptional, albeit modest, gesture” that “illustrates our desire to support you as much as possible,” the company continues.

In other words, a customer who has invested $1,000 in Just Mining’s loan product and decides to exit should not incur any loss. On the other hand, someone who wagered $10,000 would only have $1,250 covered.

It should be clarified that only credit products are affected.

“This fall will not affect the stablecoins in the wallet and other products of the platform,” Just Mining clarifies. In response, the French group also decided to “suspend the loan product for a few days until the situation recovers.” Before adding: “A message will be held shortly to provide you with more information.”

Jean-Louis Del’Oro with Anne-Katel Mousset