In the wake of this week’s Terra “stable” cryptocurrency crisis, some of the world’s largest crypto exchanges have begun withdrawing them and the associated Luna token from trading. This measure is explained by the need to protect users from risks.
Binance, the world’s largest crypto exchange by trading volume, suspended Luna and Terra listings on Thursday. Shortly thereafter followed the top ten in the world OKX. However, many other sites continue to place and trade collapsed assets.
Recall that on May 9th, the non-funded stablecoin Terra fell well below face value, causing the algorithm designed to keep the price at $1 per “coin” to hyperinflate the related Luna cryptocurrency caused it to drop from $85 to $0.005 in a week. In response to the incident, Terra’s blockchain operators suspended and then resumed work several times, only adding to the crisis and investor panic: if the network isn’t processing new blocks, all transactions will halt.
So explained what happened and their actions Binance CEO Changpeng Zhao: “Due to flaws in the architecture of the Terra Protocol, new Luna tokens have been issued at an exponential rate. Validators have suspended the entire network resulting in their not being able to deposit or withdraw funds on any exchange [с площадок]. Some of our users, unaware of the large number of newly listed OTC Lunas, have started buying Luna again, unaware that the price is likely to fall further once deposits are back in service. Due to these significant risks, we have suspended trading.”.
Several venues also reported incidents caused by investor panic at the collapse of Terra. For some time, the wrong price of the Luna token was displayed on the Crypto.com exchange, which also suspended trading in both collapsed cryptocurrencies – the platform refunded affected users $10 each in their own CRO cryptocurrency. Another problem occurred with Coinbase: users who tried to withdraw their funds from Terra sent them in the wrong format, which resulted in the loss of the funds. In response, the platform released a warning that it supports working with Terra, but does not work with the Wormhole Bridge “wrapper”.
The “shockwave” of Terra’s collapse has swept the entire cryptocurrency market, which has seen widespread losses and panic this week. Just the day before, investors started to calm down: Bitcoin eventually surged above $30,000 but fell below $27,000, and so did the “honest”, money-backed and world’s largest stablecoin Tether, which briefly fell to $0.95: It quickly reverted to face value despite losing about $3 billion in sales.