Binance, one of the world’s biggest cryptocurrency exchanges by volume of transaction, has moved to suspend LUNA and TerraUSD (UST), on its platform following the major crash of the algorithmic stablecoin.
Binance confirmed the move on May 13, with spot trading for LUNA/BUSD and UST/BUSD trading pairs being suspended. It’s not clear when the withdrawals for LUNA and UST will continue.
This is the latest move by one of the world’s most influential cryptocurrency exchanges, following one of the most significant black swan events to hit the space since the inception of Bitcoin (BTC) in 2009.
What Binance is saying
Changpeng Zhao, popularly known as CZ, who is the founder and the CEO of Binance, took to Twitter to explain why it suspended the trading of the trading pair in a thread. He stated, “An exponential amount of new LUNA were minted due to flaws in the design of the Terra protocol. Their validators have suspended their entire network, resulting in no deposits or withdrawals possible to or from any exchange.
“Some of our users, unaware of the large amounts of newly minted LUNA outside the exchange, started to buy LUNA again, without understanding that as soon as deposits are allowed, the price will likely crash further. Due to these significant risks, we suspended trading. While #Binance always aims to be neutral, helpful and protective of all users and industry peers, and we typically refrain from commenting on other projects, I will break that rule this time.
“I am very disappointed with how this UST/LUNA incident was handled (or not handled) by the Terra team. We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg. So far, we have not gotten any positive response, or much response at all (This is in sharp contrast to Axie Infinity, where the team took accountability, had a plan, and were communicating with us proactively. And we helped).
“We know there are different opinions in the community, we felt suspending trading is the best way to protect our users at this time. We will continue to monitor the situation closely 24/7. All actions will be announced on Binance.”
What you should know
- Binance Futures delisted coin-margined LUNA perpetual contracts on Thursday despite plans to salvage the floundering LUNA and UST.
- Terra blockchain validators were forced to take the network offline on May 12 in an effort to stem potential governance attacks following the crash of the network’s LUNA token.
- Terra founder, Do Kwon released a short-term roadmap to try and revive the ecosystem. The proposal entailed burning $1.4 billion UST while staking 240 million LUNA tokens in an effort to stem the devaluation of the UST $1 peg.
- However, the LUNA token is now trading in the same decimals as famous memecoin, Shiba Inu and the UST stablecoin is still depegged.