The world’s largest crypto exchange suspended LUNA and UST spot trading shortly after doing so to the LUNA coin-margined perpetual contracts. The company’s CEO took it to Twitter to offer his view on the matter.
CryptoPotato explained the saga that transpired with Terra and its two native cryptocurrencies – LUNA and UST. The latter, being an algorithmic stablecoin, essentially allowed users to profit by arbitraging it against LUNA ever since it started to de-peg from the USD (that is supposed to be pegged 1:1 with).
This ultimately led to a massive increase in LUNA’s supply, which skyrocketed to over 6.5 trillion as of now from 350 million on May 9.
Changpeng Zhao outlined these “flaws in the design of the Terra protocol” in his Twitter thread and touched upon the project’s decision to halt the blockchain twice in the past 24 hours. These actions propelled Binance and other platforms to suspend trading as there were “no deposits or withdrawals possible to or from any exchange.”
He believes some investors began accumulating portions of LUNA, whose price had tumbled from above $80 to well under the 2018 ICO price of $0.8, because they didn’t understand that “as soon as deposits are allowed, the price will likely crash further.” It actually did dump even more (another 99.9%) to $0.000035 as of now.
Despite a few speculations and proposals, TerraForm Labs and the LUNA Foundation Guard are yet to publish a specific solution to this mayhem.
As such, CZ said he was “very disappointed” with how the team handled “(or not handled)” the situation.
5. 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
— CZ Binance (@cz_binance) May 13, 2022