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Binance CEO Changpeng Zhao (commonly known as CZ) expressed his disappointment with the way Terra handled the collapse of its native crypto asset LUNA along with its stable coin TerraUSD (UST) and mentioned that they should have handled things differently.
In a lengthy Twitter thread, CZ revealed that Binance reached out to the Terra team with some 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.” CZ tweeted
As the situation quickly escalated, Binance temporarily suspended LUNA and TerraUSD trading with its proprietary stable coin Binance USD (BUSD).
CZ further revealed the reasons that drove the crypto exchange to halt the trading of LUNA and UST coins.
“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 CZ, the move enables Binance users to convert their LUNA or UST to other digital assets.
He further stated, “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.”
At the time of writing, Luna is still trading way below its all-time high and the team still has a long way to go in fighting the crisis.