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Stablecoin crash: Binance CEO comments on the Terra debacle

 


Things are cracking as Binance CEO Changpeng “CZ” Zhao felt compelled to clarify a few points today. Binance was rumored to be heavily invested in Terra, but he denied it. According to him, Binance Labs made an investment of 3 million US dollars in 2018. It was one of hundreds of investments, as "CZ" further explained.



There were no other investments in LUNA or UST. He also pledged his continued support to the Terra community. Zhao again criticized Terraform Labs CEO Do Kwon's plans. This one seems to be working on reviving Terra so far.


However, a restart seems to be impossible, if only because of the consequences of the catastrophe. Confidence in the stablecoin TerraUSD has finally been destroyed. The case should also internationally ensure that regulatory authorities and politicians feel encouraged to evaluate stablecoins even more strictly and regulate them more harshly.   


CZ finds clear words

The Binance CEO has been harsh on any plans dealing with a reboot of Terra. In his opinion, neither a fork nor a redistribution and reduction of the circulating amount of LUNA makes sense.


This is currently around 6.5 trillion LUNA and was capped by the implementation of a proposal. Shortly thereafter, the LUNA price shot up in the decimal place and proved to be profitable for speculators in the short term.

Zhao called for more transparency from Terra Labs and the Luna Foundation Guard (LFG). There is no official information on how exactly the LFG bitcoin reserve was used. In his view, all means should be used to buy back UST from the market.


Stablecoins are falling into disrepute

Terra wanted to create a decentralized solution for a stablecoin and failed miserably. The problem facing the entire industry is the loss of confidence in the entire stablecoin market.


Other stablecoin solutions are price-fixed or covered by US dollars deposited in the bank or by other assets. As such, they are not subject to the same risks as Terra.


Anyone who attaches particular importance to security in this turbulent phase will probably convert their stablecoins into “hard” euros and transfer them to their bank account. So far, however, there have been no signs of failure in other stablecoins.

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