A few days ago, the crypto community was shocked when UST, the 3rd largest stable coin in the world by market capitalization, dropped the $1 mark.
In the hope of redemption, Terra, the team behind UST, has increased the rate of “burning” this stable coin. However, this resulted in a catastrophic drop in the price of the associated token, LUNA, because the more USTs burned, the more LUNAs were produced. Once having a peak price (ATH) of nearly 120 USD, after just over 2 days, 1 LUNA was only worth 0.00008 USD at the time of writing, equivalent to being divided up to 1.5 million times.
On the morning of May 13, the world’s largest cryptocurrency exchange, Binance, announced that it would stop spot trading between LUNA and popular coins, including the LUNA/USDT and LUNA/BTC pairs. The only trading pair kept by Binance at that time was LUNA/BUSD, but by the afternoon of the same day, this pair was also suspended from trading.
Recently, on the official Twitter page, the head of Binance, Mr. Trieu Truong Bang, also known by the nickname CZ, explained this decision. Thereby, CZ said that stopping LUNA trading is a measure of Binance to “protect users”.
“At Binance, we have always prioritized the protection of our users. We have made the decision to suspend trading of LUNA and UST. An exponential amount of new LUNA was created due to design flaws of the Terra protocol. Their system was down, making it impossible to deposit or withdraw funds to or from any exchange.
Some of our users have started to buy back LUNA without understanding that the price is likely to continue to fall due to the ignorance of the large amount of newly minted LUNA outside of the exchange. Due to these significant risks, we have suspended trading.
While Binance has always been about being neutral, helpful, and protecting all users and industry professionals, and we usually don’t judge other projects, I’m going to break that rule this time. .”
In particular, CZ expressed disappointment when the Terra team lacked cooperation with Binance in handling the situation. This is in stark contrast to Axie Infinity, when the blockchain network of this game, Ronin, was hacked at the end of March, but both sides have interacted to get through the difficult times.
“I’m very disappointed with the way Terra and the others have been handle (or rather don’t handle) the problem with UST and LUNA. We asked their team to restore the network, burn the extra minted LUNA, and restore the UST. So far, we have not received any response. This is in stark contrast to the Axie Infinity team, where they are accountable, planning, and proactively communicating with us. And we also helped them.
We know there are mixed opinions, but we feel that suspending trading is the best way to protect our users at this time. We will continue to monitor closely 24/7 situation. The latest information will be announced on Binance’s Twitter.”
Currently, after about 10 hours of interruption, the Terra blockchain is back up and running at 19:46 on May 13 (Vietnam time). Not long after that, the LUNA/BUSD pair was also resumed trading on Binance.