Financial Times carps Binance for alleged Terra (UST) and LUNA promotion as a ‘safe’ investment just weeks before the epic crypto crash.
Do you remember times when it was really cool to have LUNA in your crypto portfolio?
It was like two weeks ago, but today everything connected with Terraform Labs is treated as the biggest scam in the whole crypto history.
Seems like everybody connected with Terra company won’t have a chance to avoid responsibility for their actions.
Well, that makes sense because investors lost billions of dollars.
But the case is new attacks on those who tried to support Terra or promoted it in any way. One of the biggest crypto exchanges is already being subject to it. Journalists claim Binance promoted Terra and LUNA right before they collapsed.
FT against Binance with Terra and LUNA crash
The new Financial Times article tells that the Binance exchange promoted UST as a ‘safe’ investment just weeks before the $40 billion collapse’. FT authors point out that Binance highlights the central role crypto exchanges play in choosing which digital tokens are made easily accessible to mainstream traders.
That is hard to challenge, but their claim to Binance sounds like.
So how did Binance promote Terra and LUNA?
The world’s biggest crypto exchange advertised on April 6 an investment scheme in which clients lend out their Terra to earn a yield of almost 20% as a “safe and happy” opportunity.
‘Binance message to its Telegram users on April 6 promoted the opportunity to earn high returns by lending [staking] TerraUSD stablecoin… If terra falls below $1, traders are incentivized to purchase the stablecoin, and then redeem it for $1 worth of newly minted luna tokens. They pocket the difference in price as profit,’ FT wrote.
There was a lot of discussion about these 20% earnings ads which initially came into a total crash for all the Terra investors. But FT carps Binance’s influence and says that the exchange could make traders buy UST/LUNA tokens.
US and UK are having discussions about crypto advertisements as governments still didn’t decide how they can regulate digital assets. Even the Binance website notes that “cryptocurrency trading is subject to high market risk”.
So the main requirement for the Binance and other crypto exchanges is to deeply monitor all crypto projects they are proposing. Try to think by yourself about how correct is it.
Binance reacts to the crypto crash
As we know, Binance banned Terra and LUNA trades when it went through the so-called ‘Death spiral’.
Later Binance CEO Changpeng Zhao criticized the idea of the Terra fork. The fork is about creating Luna Classic (LUNC) token. But Zhao said that ‘forking does not give the new fork any value’ and that’s ‘wishful thinking’.
‘One cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges),’ Zhao said, noting that the new version of LUNA ‘based on a snapshot of their holdings’ won’t succeed.
Later he also confirmed that Binance wanted to help during Terra and LUNA crisis. Binance tried to reach out to the Terra developers for mitigating the crisis. But the Terra network did not respond to Binance’s request.
Generally, Zhao expressed his support to Terra’s community though. But he would like to see ‘more transparency from the entity’.
‘I am very disappointed with how this incident was handled (or not handled) by the Terra team. We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg. So far, we have not gotten any positive response or much response at all. This is in sharp contrast to $625 million Axie Infinity hack in March 2021. Where the team took accountability, had a plan, and were communicating with us proactively. And we helped,’ Zhao posted.
Binance promoting Terra and Luna really sucks. But the fact that Terra managers could know about the collapse in advance is much worse than anything.
Sources: Financial Times
