Binance Suspended the Withdrawal Business of Luna and UST

Binance has suspended the withdrawal of Terra’s two blockchain tokens, including Terra’s native token Luna and Terra’s flagship algorithm stable currency Terra USD (UST).

In a statement, the exchange explained that the suspension was due to a large number of outstanding withdrawal transactions caused by “slow network and congestion”. Withdrawals will resume when the network becomes stable.

“Once we believe that the network is stable and the volume of transactions to be submitted decreases, Binance will reopen the withdrawal of these tokens. We will not inform users in further announcements,” Binance said.

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What is the Deal Between Binance and Terra?

Binance suspended withdrawals from Luna and UST after the prices of the two tokens plummeted. Yesterday, UST lost its dollar peg for the second time in three days.

According to coinmarketcap, UST has fallen to a low of $0.68 in the past 24 hours, but the current trading price is about $0.92. Deleveraging also affected Luna’s price. CMC data also showed that Luna fell 48.11% to about $32 on the same day.

The price decline began with what community members called coordinated attacks. On Friday, an observer pointed out on twitter that a large number of UST withdrawals occurred on the decentralized exchange (DEX) anchor protocol (ANC) on Terra blockchain.

Subsequently, it was pointed out that with the continuous decline of anchor’s UST balance, a large number of UST have found other exchanges and been thrown out.

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Did Terra’s Algorithm Stabilization Experiment Fail?

The moon foundation guard (LFG) has been actively working to stabilize the algorithm and return the currency to the linked state. LFG announced in a tweet that, under its mandate, it had voted to deploy $1.5 billion from its reserves to absorb the impact.

“Under the authorization of LFG, LFG will actively defend the UST linkage and the stability of the wider Terra economy, especially under the fluctuation of traditional markets and the uncertainty of macro conditions,” LFG said on twitter.

The funds deployed include a $750 million loan to OTC companies to help link UST, and another $750 million of UST to accumulate bitcoin when the market returns to normal. In a recent update, do Kwon, founder of Terra, pointed out that more funds are being deployed. However, at the time of writing this article, tokens continued to be sold. Similarly, Kraken and coinlist also suspended the withdrawal of Luna and UST on their exchanges.