- Binance suspended trading in TerraUSD and luna on Friday in the wake of price implosions for the cryptocurrencies.
- CEO Changpeng Zhao said an “exponential number” of new luna coins were minted due to flaws in the Terra protocol’s design.
- TerraUSD traded well below the $1 peg on Friday and luna crashed to as low as zero.
Binance on Friday halted trading of the algorithmic stablecoin TerraUSD and its associated luna coin after price drops prompted administrators behind the digital assets to shut down their network.
The world’s largest cryptocurrency exchange said in a report that spot trading for the LUNA/BUSD and UST/BUSD trading pairs would be suspended Friday morning and withdrawals for the coins will open when the Terra network stabilizes.
The moves come after a plunge in the value of the coins that started last weekend. TerraUSD lost its peg to the US dollar and sister currency Luna eventually crashed to zero just five weeks after hitting a
of $41 billion, according to CoinGecko data. TerraUSD, or UST, was trading around $0.09 on Friday.
The slide put a spotlight on algorithmic stablecoins whose values are determined by a combination of computer codes and reserves to maintain a peg.
Administrators of Terraform Labs, the company behind the TerraUSD-luna crypto project, broke the network overnight and resumed it later, but luna still dropped to a crappy value. The network has been shut down in consultation with validators who monitor transactions. Terra was working on a network recovery plan, it said Thursday on Twitter†
When suspending trading, Binance CEO and founder Changpeng Zhao cited an “exponential number” of new luna coins recently minted due to flaws in the Terra protocol design. Meanwhile, the network’s suspension resulted in no deposits or withdrawals possible to or from an exchange, he added in a statement. thread of messages on Twitter†
“Some of our users, unaware of the large amounts of newly minted LUNA off-exchange, started buying LUNA again, not understanding that once deposits are allowed, the price is likely to crash further. Because of these significant risks, we have trade,” Zhao wrote.
Zhao said that Binance’s goal is to be neutral and that it generally refrains from commenting on other projects, but that he broke that rule in the Terra situation.
“I am very disappointed with the way this UST/LUNA incident has been handled (or not) by the Terra team. We have asked their team to restore the network, burn the extra minted LUNA and recover the UST pin. So far, we’ve had no positive response, or no response at all,” Zhao wrote to his 5.9 million followers on Twitter.
He said that was in “stark contrast” to the team behind the online play-to-earn game Axie Infinity. Binance’s work with Axie Infinity helped the exchange recover nearly $6 million from a North Korean group believed to be behind a $620 million hack of the popular game.