Binance CEO Changpeng Zhao says he’s unhappy with the way Terra handled the collapse of its native crypto asset LUNA and its stablecoin TerraUSD (UST).
In a lengthy thread, Zhao tells his six million Twitter followers that Binance reached out to the people behind Terra and made suggestions on how to mitigate the crisis.
“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.”
Binance went on to temporarily suspend LUNA and TerraUSD trading with its proprietary stablecoin Binance USD (BUSD).
Zhao reveals the reasons that drove the crypto exchange to halt the trading of LUNA and UST:
“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.”
Hours later, Binance decided to resume trading activities involving LUNA and UST. According to Zhao, the move enables their users to convert their LUNA or UST to other digital assets.
“Was in a no-phone meeting for two hours. At least, there is progress.
LUNA blockchain resumed, no more minting.
And deposits, withdrawals and trading resumed. Trading is important for existing holders.”
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