The world’s largest crypto exchange Binance had the potential to reap mega earnings from Terra’s UST algorithmic stablecoin before it crashed last week, along with its sister cryptocurrency Luna.
In 2018, Binance put $3 million into Luna and received 15 million tokens in return. At Luna’s price peak in April, those tokens were worth $1.6 billion, Binance’s CEO Changpeng Zhao said in a Monday tweet. At Luna’s price now, the tokens are worth about $2,391.
But despite Binance’s big losses, Zhao said he still wants retail traders who lost money during Luna’s crash last week to be reimbursed before Binance is.
“To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails [sic] users first, Binance last, if ever,” Zhao wrote in a tweet on Monday.
Last week, Terraform Labs’ algorithmic stablecoin UST, which was theoretically tied to the price of the U.S. dollar, tanked to about 13 cents. As a result of the crash, Luna, the cryptocurrency that was meant to help the UST stablecoin keep its dollar peg, also collapsed. Luna went from trading at a high of around $119 just last month to being worth a mere fraction of a cent.
Binance has been a key supporter of the company that created Luna, Terraform Labs, for years. Binance’s investment arm was a lead investor in a $32 million funding round in 2018 that Terraform Labs said at the time was meant to build a “modern financial system on the blockchain,” according to VentureBeat.
But the relationship between the Terraform Labs and Binance has not been as rosy lately.
Zhao 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 was frank with his opinion.
“This won’t work,” he said in a tweet.
In a separate tweet last Friday, Zhao said of the Terra team, “So far, we have not gotten any positive response, or much response at all.”
Both UST and Luna’s crash caused major losses for small investors, some of whom vented their despair on social media last week.
Zhao along with other notable crypto figures like Ethereum founder Vitalik Buterin and Justin Sun, the creator of algorithmic stablecoin USD (USDD), have thrown their support behind a proposal suggested by a Twitter user to refund 100% of funds to the poorest 99.6% of wallets who lost money from the UST crash. Sun said on Monday he would pledge $10 million of his stablecoin tied to the U.S. dollar so the poorest 236,000 UST holders can be reimbursed.
The Luna Foundation Guard, an organization that supports the Terra ecosystem, said in a Monday tweet that it had heavily dipped into its reserves to try to stabilize UST. Whatever reserves it has left over will be used to compensate remaining users of UST while prioritizing the smallest holders. Yet, details on how the compensation effort would be carried out were not clear.
The organization said in a Monday tweet that they were considering various distribution methods and would be sending an update at a later date.
