As the Terra crisis continues, some of the largest cryptocurrency exchanges in the world have begun removing Terra’s UST stablecoin and its pegged Luna token, citing the need to protect users from risk.
Binance, the largest cryptocurrency exchange by trading volume, halted trading of Luna and Terra on Thursday. The OKX exchange – one of the top 10 by volume – took the same action shortly afterwards. The FTX exchange and other smaller exchanges continue to list and trade the Luna and UST tokens.
The deletions come in response to a wider collapse of the Terra project’s economy. After the UST stablecoin dropped well below its dollar peg on May 9, an algorithmic process intended to balance the price at nearly $1 caused hyperinflation in the Luna token, pushing the price from $100 to less than 1 cent. fell.
In response to the crisis, Terra blockchain operators have repeatedly stoppedthan uninterrupted the network, increasing the frustration of investors in the project. (If a network does not process new blocks, then no transactions can be made with assets hosted on that blockchain.)
Binance CEO Changpeng Zhao posted a Twitter thread explaining the reason behind suspending trading of the platform’s Luna.
“An exponential amount of new LUNA has been minted due to flaws in the Terra protocol design. Their validators have suspended their entire network, preventing deposits or withdrawals to or from an exchange,” said Zhao.
“Some of our users, unaware of the large amounts of newly minted off-exchange LUNA, started buying LUNA again, not understanding that once deposits are allowed, the price is likely to crash further. Because of these significant risks, we have suspended trading,” he said.
Some exchanges have also been caught off guard by the frenetic battle to earn money from users who have invested in the Terra project.
The Crypto.com exchange released a statement Friday highlighting an incident in which users trading Luna were given an incorrect price.
“All affected transactions (buy and sell) will be rolled back and affected users will be credited $10 in [Crypto.com token] CRO for the inconvenience caused,” the statement said. Crypto.com also said all Luna trading would be halted until further notice, although a Twitter post from the exchange stated that users revoke the Luna token†
Elsewhere, another group of investors trying to get their money out of Terra ran into trouble sending UST to the Coinbase exchange in an unsupported format, resulting in lost money. As of May 13, an advisory on the Coinbase site said the exchange supported UST, but not UST in the packaged Wormhole form.
Shockwaves from the Terra crash continue to ripple over cryptocurrency markets, which have suffered significant losses over the past week and sent trading into a panic. But as of Friday, there were signs that other cryptocurrencies could be isolated from Terra’s woes: Bitcoin prices rose to $30,000 after failing to trade above $25,000 the previous day.
Other stablecoins appear to have escaped Terra’s fate: Tether, the largest stablecoin by market capitalization, has regained its dollar value after dropping to 95 cents on Thursday.