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CZ Shuns Rumors About Binance’s Investment in Terra LUNA

By:
Varuni Trivedi
Updated: May 15, 2022, 12:35 GMT+00:00

The fall of Terra (LUNA) and, subsequently, the larger market has been a "watershed moment" in the history of the cryptocurrency market, according to Binance's CZ.

binance, luna

Key Insights:

  • CZ shuns rumors of Binance’s investment in Terra.
  • Binance had delisted Bitcoin (BTC)-margined LUNA perpetual contracts on Thursday.
  • CZ had earlier mentioned that he was “very disappointed” with how the Terra team handled the situation.

A couple of days ago, Binance CEO Changpeng Zhao (CZ) issued a warning on Twitter to “respect the market, with a level of caution,” as the LUNA and UST saga continued to shake up the market.

Even though CZ acted as a critic, over the last week, amid the LUNA and UST crisis, rumors were floating on Twitter that crypto exchange Binance was one of the big investors in the Terra LUNA ecosystem.

CZ clears name from LUNA investment

To clear Binance’s name from the Terra conundrum, Binance CEO CZ stepped forward to address the rumors. He wrote on his Twitter account: “First, I need to address falsehoods circulating in crypto Twitter. Binance did not participate in the 2nd round of Luna’s fundraising, nor did we acquire any UST. Binance Labs invested $3m USD in Terra (the layer 0 blockchain) in 2018. UST came much later after our initial investment.”

CZ also added that Binance Labs had made investments in a number of crypto projects over the last four years. While some of those projects have fallen by the wayside, a few have been highly successful. “That’s how investments work,” CZ said.

Can Terra “rise from ashes”?

On Thursday, Binance posted an update announcing that it was delisting COIN-margined LUNA perpetual contracts. Binance Futures uses Bitcoin (BTC) as the base asset for its perpetual contracts, which means that customers need to use Bitcoin to fund the margin on their LUNA trades.

The exchange also reduced the available leverage on its USDT-margined LUNA perpetual, with the maximum set at 8x. Soon after LUNA’s freefall began, the exchange halted LUNA and UST withdrawals in response to UST losing its peg to the dollar.

Commenting about the market fall, CZ cautioned investors by saying:

“We are in a new market, with many innovations. Algo stablecoins are one of them. When they are hot, they are all the rage. When they drop, it can be a vicious circle.”

The collapse of the Terra ecosystem was one of the most noteworthy falls as the Terra tokens fell to dust. LUNA made its way from the top five cryptocurrencies by market cap down to 207 in market cap, as the coin struggled to make its way back up.

Amid the ongoing drama, CZ added that he was hopeful that the project teams “can rise from the ashes and rebuild in a proper and sensible way.”

However, a full recovery for Terra’s LUNA seems like a distant dream to many in the market. At the time of writing, LUNA traded at $0.0002767 noting a 43.46% fall in price over the last 24-hours.

About the Author

A Journalism post-graduate with a keen interest in emerging markets across South East Asia, Varuni’s interest lies in the Blockchain technology. As a financial journalist, she covers metric and data-driven stories with a tinge of commentary, and strongly believes in HODLing.

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