Binance Loses Big

Binance, the world’s biggest crypto exchange, had the potential to reap massive earnings from Terra’s UST algorithmic stable coin before it crashed last week, along with its sister cryptocurrency Luna. 

In 2018, Binance invested $3 million in Luna, receiving 15 million tokens in return. At Luna’s price peak in April, that investment was worth $1.6 billion, Binance CEO Changpeng Zhao said in a tweet. At Luna’s current value, those tokens are worth roughly $2,391. 

Despite Binance’s huge losses, Zhao stated that he still wants retail traders who lost money during Luna’s crash last week to be compensated before Binance is.

In a Tweet on Monday, Zhao reiterated that in order to lead by example in protecting users, “Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever.”

Last week, Terraform Labs’ algorithmic stable coin UST, fell to about 13 cents taking down Luna, a coin that was meant to help it maintain its dollar peg. Luna quickly fell from its high trading of around $119 just last month to a mere fraction of a cent.

Binance has been a key backer of the company behind Luna, Terraform Labs, for years. According to VentureBeat, Binance’s investment wing was a lead investor in a $32 million funding round in 2018. Terraform Labs said the project was meant to build a “modern financial system on the blockchain.” 

However, due to the events that unfolded last week, the relationship between the Terraform Labs and Binance has not been as rosy. 

CZ said last week that he was “very disappointed” with how the team behind Luna and UST handled the collapse. When Terraform Labs CEO Do Kwon said he wanted to fork Terra, or create a new blockchain and distribute millions of tokens in a new cryptocurrency to supporters, Zhao tweeted, “This won’t work”. 

The crash of both UST and Luna’s caused massive losses for small investors, some of whom vented their despair on social media last week.

Binance CEO Changpeng Zhao, along with other notable crypto figures like Ethereum creator Vitalik Buterin and Justin Sun, the creator of algorithmic stablecoin USD (USDD), threw massive support behind a Twitter user’s proposal to refund 100% of funds to the poorest 99.6% of investors who lost money from the UST crash. On Monday, Sun pledged $10 million worth of his stablecoin tied to the U.S. dollar so the poorest 236,000 UST holders can be compensated. 

The Luna Foundation Guard, an organization that supports the Terra ecosystem, tweeted that it had heavily eaten into its reserves in an attempt to stabilize UST. Whatever reserves it has leftover will be utilised to compensate remaining users of UST while prioritizing the smallest holders. Details on how Luna plans to carry out the compensation effort remain unclear. The organization tweeted that it was considering various distribution methods and would send an update regarding the matter.

The Terra team’s troubles don’t seem like they are soon to come to an end. Earlier today, The block crypto website reported that Luna’s legal team had resigned.

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