Luna, UST Update: Binance CEO is Disappointed with How Luna and UST Price Collapse is Handled

Crypto wallet and exchange Binance relists Terra’s cryptocurrency LUNA and stablecoin UST from its platform after suspending its trading on May 13 for its recent coin collapse. Binance CEO Changpeng “CZ” Zhao recently questioned the proposal of hard forking the Terra blockchain as a means to revive the once-thriving Terra (LUNA) and TerraUSD (UST) ecosystems.

CZ said that hard forking to TERRA2 “won’t work” as it would involve providing a new version of LUNA to all holders.

“Reducing supply should be done via burn, not fork at an old date, and abandon everyone who tried to rescue the coin. I don’t own any LUNA or UST either. Just commenting,” CZ stated.

Rather, he suggested that Terra should first use its Bitcoin (BTC) reserves to buy back UST to revive the coin’s pegging. UST is an algorithmic stablecoin, a cryptocurrency that offers improved price stability without any collateral. (Read more: What are Algorithmic Stablecoins?)

1/8 These past weeks have proven to be a watershed moment for the crypto industry. We have witnessed the rapid decline of a major project, which sent ripples across the industry, but also a new found resiliency in the market that did not exist during the last market downswing.
— CZ 🔶 Binance (@cz_binance) May 15, 2022

Additionally, CZ pointed out the potential issues with forking Terra and noted that, “minting, forking, don’t create value.” Then the Binance CEO suggested an ideal way to revive the token’s value is to buy back and burn its supply.

Although the exchange was expressing support for the Terra community, the CEO emphasized the need for transparency.

6/ In this regard, I would like to see more transparency from them. Much more! Including specific on-chain transactions (txids) of all the funds. Relying on 3rd party analysis is not sufficient or accurate. This is the first thing that should have happened.
— CZ 🔶 Binance (@cz_binance) May 15, 2022

He also added that “failures can/will happen. But when they do, transparency, speedy communication and owning responsibility to the community is extremely important.”

Recently, CZ expressed his disappointment in the way Terraform Labs handled the recent LUNA and UST collapse, as opposed to the way Axie Infinity recently handled its hacking crisis. He also noted that the team behind the Terra network hardly responded to Binance’s request to help them restore the network.

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

On Monday, the fund set up by Terra creator Do Kwon Luna Foundation Guard disclosed that it spent almost all of the bitcoin in its reserve last week in an attempt to save UST.

1/ As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets:
· 80,394 $BTC
· 39,914 $BNB
· 26,281,671 $USDT
· 23,555,590 $USDC
· 1,973,554 $AVAX
· 697,344 $UST
· 1,691,261 $LUNA
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022

Currently the fund only has 313 bitcoins left in its reserve. (Approximately ₱487 million). The firm said it would use the remainder of its $85 million in crypto assets — including some BNB and avalanche — to “compensate remaining users” of UST.

“We are still debating through various distribution methods, updates to follow soon,” –Luna Foundation Guard

Newsletter: What happened to USDT, UST, and LUNA | May 12, 2022

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