Binance Huge Loss on The Terra Labs Investment.
Binance invested $3 million in the Terra network in 2018 making it the owner of 15 million LUNA tokens. According to CEO Zhang, going by the peak price of LUNA, Binance’s investment was, before the implosion, estimated to be worth $1.6 billion.
The Binance CEO said 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 said it won't work. The market capitalisation of the token slumped from around $40 billion to around $6 million, according to Coinmarketcap. Luna’s downfall started when sister token UST, was 'depegged' from its $1 value as big investors started dumping it.
CZ says that Binance is now more concerned with how retail investors will be compensated. The Binance CEO also added that the exchange had previously held talks concerning investing $300 million in LUNA in a $1 billion funding round, but that deal is now obviously off the table.Along with thousands of retail investors who lost money following the collapse of the Terra ecosystem alongside its Terra USD (UST) stablecoin, Binance has seen its investment written down to a mere $3,400.
Though, it's not all bad news. The exchange received around $10.3 million worth of UST in staking rewards (likely through Anchor, which offered up to 20% yield). While that would be worth $74 million if UST was holding its peg to the dollar and not trading at its current value of $0.13, it means Binance is still up on its initial investment.The algorithmic stablecoin UST broke from its peg to the US dollar last week, resulting in huge losses for investors in both UST and Luna, whose price was meant to support UST's peg.
The protocol founder and CEO – Do Kwon – came up with a revival plan. Without going into the details of how the plan changed over the course of a few weeks, the Terra community and validators voted and accepted the proposition, and the tone was set.Terra Ecosystem Revival Plan 2, the plan aims to see the creation of a new Terra chain that won’t have an algorithmic stablecoin. The old chain will be called Terra Classic, and its LUNA will carry the ticker LUNC. The new chain’s token will be called LUNA. Multiple exchanges have attested support for the project. some of these exchanges are:
Kucoin
Huobi
Bitrue
GateIO
Binance
FTX
Bybit
Bitfinex
The exchange(Binance) indefinitely suspended the trading of Luna and UST tokens across all its spot, cross margins and isolated margins pairs after the tokens lost nearly 100% of their value in a span of days. The move, which follows the exchange pulling support for trading of futures contracts for the Luna token earlier on Thursday, comes as Terraform Labs has increased the circulating supply of Luna tokens to over 6.5 trillion, up from 386 million three days ago (according to Terrascope, a tool that tracks Terra stats) in an attempt to push its sister token, a supposed stablecoin, to regain its 1-to-1 peg to the dollar.
🛑DISCLAIMER: I am not a financial advisor. All contents discussed on this blogpost are solely my personal views for education/entertainment purposes only . Do your own research and due diligence.
