Terraform Labs, the company behind plummeting stablecoin TerraUSD, has not responded to Binance’s request to restore the network, burn the additionally minted token Luna, and recover the UST peg.
Binance CEO Changpeng Zhao / Photo credit: Binance
An “exponential” amount of new Luna tokens were minted due to flaws in the design of the Terra protocol, Binance CEO Changpeng Zhao said in a tweet. This drove Terra’s validators to suspend their entire network, resulting in no deposits into or withdrawals from any cryptocurrency exchange.
According to Binance, some of its users bought Luna as they were unaware of the large amounts of newly minted Luna outside the exchange, which eventually led to a crash in the price of the token.
“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,” Zhao said.
See also: Luna and UST are close to dying. What comes next?
The Binance CEO compared Terra’s response to the incident with that of Sky Mavis, the parent firm of play-to-earn game Axie Infinity. The company took accountability for a recent US$620 million hack and communicated with the Binance team “proactively.”
Prior to last Friday, the most that UST had ever strayed from its US$1 peg was 4 cents (US$0.06). However, UST prices dropped to US$0.747 on Tuesday, and by Friday, the price fell to a new low of US$0.044, according to CoinGecko.
Editing by Eileen C. Ang
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