Billionaire investor Bill Ackman says Terra's 'algorithm' sounds like the 'crypto version of a pyramid scheme'

Bill Ackman thinks of the Terra stable coin as a pyramid scheme.

In a series of posts on Tuesday, Ackman said that he was in favor of this stance.

Terra sounds like a pyramid scheme, according to Ackman. There is no underlying business.

Hundreds of billions of dollars worth of cryptocurrencies were wiped out in last week's crash. Terra was pegged to the US dollar and was a factor in the crash. The stable coin went into freefall after it was dethroned from the dollar.

Luna has plummeted more than 97% in what analysts called a "death spiral".

There was a crisis of confidence in the $1.2 trillion market, with investors left in a precarious position while facing a loss of optimism in a bear market.

Ackman criticized Luna on Tuesday, saying it was appreciated by attracting more followers and limiting the supply of token. The system collapsed when the sellers far exceeded the buyers.

The Luna scheme was digitization and the hype surrounding it enabled it to achieve enormous scale quickly, he wrote.

Ackman said that while the technology is brilliant, it could also be a problem.

The industry should self-regulate other projects with no underlying business models before regulation shuts down the good and the bad.