Leading cryptocurrency exchange Binance has revealed it could have reaped $1.6 billion from a $3 million investment into the Terra ($LUNA) ecosystem, but never touched its holdings and as a result, they’re now worth less than $3,000.
On social media Binance’s CEO Changpeng “CZ” Zhao update the cryptocurrency community on Binance’s involvement with Terra, whose ecosystem collapsed earlier this month after its algorithmic stablecoin UST lost its peg to the U.S. dollar, leading to a death spiral that led to the minting of over 6 trillion LUNA, shattering the token’s value.
Per CZ, Binance received 15 million LUNA, which at the token’s price peak were worth over $1.6 billion, as part of its original $3 million investment into Luna, made in 2018. The tokens are now worth little over $2,700.
Despite Binance’s losses, CZ called for retail traders who lost money over the crash to be reimbursed before the cryptocurrency exchange. The CEO wrote that to “leady by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first.”
Terraform Labs’ algorithmic stablecoin UST lost its peg last week after a $500 million withdrawal from its Anchor Protocol led to a large sale on Curve, where liquidity was low. The sale saw UST lose its peg and triggered a bank run. Because of the algorithmic system behind UST, trillions of LUNA were printed while the stablecoin’s value kept on dropping.
Binance has been a key supporter of the Terra ecosystem after it was a lead investor in Terraform Labs’ $32 million funding round in 2018. Over the past few days, CZ has however expressed concerns with how the Terraform Labs team handled the crash and how it’s working to reimburse users.
CZ, along with Ethereum founder Vitalik Buterin and TRON founder Justin Sun, has backed a proposal to refund the poorest 99.6% of wallets affected during the crash. Sun even committed $10 million worth of his algorithmic stablecoin USDD to reimburse the poorest 236,000 UST wallets.
The Luna Foundation Guard (LFG), an organization that supports the Terra ecosystem, has said it moved most of its reserves at the time to defend UST’s peg. Whatever it has left is now set to be used to compensate affected users.
In a tweet, the LFG detailed it’s “still debating through various distribution methods” and noted updates are coming at a later date.
To make sure you receive a FREE weekly newsletter that features highlights from our most popular stories, click here.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
Featured image via Unsplash
Source: Read Full Article