In the chaos of 2022's crypto downturn, one startup stood out—not for its innovation, but for the sheer scale of its deception. Stablegains, a fintech app marketed as a safe and easy way to earn passive income through stablecoin investments, turned out to be one of the most misleading ventures in the space. The company promised users up to 15% annual returns by allocating funds into “diversified and stable protocols.” In reality, nearly all user deposits were funneled into Terra’s Anchor Protocol—the same protocol that spectacularly imploded when TerraUSD (UST) lost its dollar peg.
The collapse of UST wiped out nearly $50 million in customer funds overnight. But the biggest blow wasn’t the market crash itself—it was the discovery that Stablegains had never disclosed to users that their money was entirely tied to a single, ultra-risky platform. The promise of “stable gains” was, in hindsight, a brutal irony.
Customers, many of whom believed their funds were diversified and risk-managed, filed lawsuits. The company quietly shut down in the aftermath, issuing a statement that sounded more like a shrug than an apology. Investors and users were left stunned, while regulators began circling the startup ecosystem with sharpened scrutiny.
What made Stablegains particularly dangerous was its veneer of legitimacy. Its website was polished, its investor pitch was slick, and it leaned heavily on the startup world’s favorite tropes—efficiency, transparency, and of course, the magic of passive income. It was all a façade. Behind the scenes, the team made reckless decisions, hiding the truth behind vague marketing language and vague terms of service.
The scandal prompted a larger conversation about transparency in the DeFi-adjacent startup space. How many other apps are promising “stable” returns while gambling with customer money behind closed doors? As with Nate’s AI illusion, Stablegains highlights how easily trust can be weaponized in a startup world driven more by hype than honesty.
Financial regulators in both the U.S. and Europe are now investigating. Meanwhile, users have taken to online forums and legal platforms in search of justice. The company’s founders, who once gave interviews about democratizing finance, have gone silent.
Stablegains is now a textbook example of the dangers that arise when innovation is used as a mask for mismanagement. In the world of startups, the line between bold vision and financial fraud is razor-thin—and when it snaps, it’s always the users who fall the hardest.