Things in the cryptocurrency world got off to a shaky start in mid-May, when Terra USD, an algorithmic stable currency, lost its peg to the US dollar and began trading for less than $1.
Tether, the world’s one of the most popular stable assets, fell as low as 95 cents on most markets before recovering slightly.
The collapse of the original Terra ecosystem sent shockwaves through the crypto world, with major cryptocurrency exchanges facing backlash for first listing the failing stablecoin and token. After announcing support for Terra 2.0, the new LUNA currency, and participating in its airdrop, Binance was criticized.
Binance CEO Changpeng Zhao revealed in a recent interview with Fortune that he received some LUNA coins in exchange, which he stored in a public cryptocurrency wallet address and remained untouched, totaling roughly 50 million LUNA. The CEO also revealed that the company invested in Terra as part of a Binance Labs investment of $3 million in 2018.
“But we didn’t make any money. Even today, theoretically we lost like $1.6 billion of investment at the top, and it’s okay,” the Binance CEO stated.
Investors have recently expressed worry over whether Binance profited from the Terra ecosystem’s failure, as well as if CZ spoke with Terra co-founder Do Kwon as events progressed.
What caused the sell-off?
Jump Crypto, the cryptocurrency-focused affiliate of trading business Jump Trading, has now spoken out about Terra’s collapse, despite being one of the project’s key supporters.
A sequence of trades in the USTw-3CRV curve pool, according to the report, caused the sell-off. The pool lost its balance and depth after TerraForm Labs (TFL) withdrew UST liquidity and two wallets placed significant UST sell orders into the pool, which was supposed to hold a 50:50 ratio of UST and 3CRV. The peg was also strained as a result of massive outflows from Anchor Protocol.