Changpeng Zhao gave an update on Binance’s investments in Terra (LUNA). After reaching up to $1.6 billion, they are now worth only $3000. However, he announced that the profits made by the platform in staking will be redistributed to the people harmed by the affair.
Binance loses $1.6 billion on LUNA
In a series of tweets, Changpeng Zhao discussed Binance’s investments in the Terra (LUNA) ecosystem. In it, we learn that the world’s leading cryptocurrency exchange platform made huge profits on LUNA, but lost almost all of them.
1/5. Some interesting updates, full transparency and lead to protect users:
As it turns out, most UST pairs were 0 fee to begin with. (I didn’t know that, our team had to tell me.) So, not much UST there.
We do have… https://t.co/ihxbHzwmK5
– CZ Binance (@cz_binance) May 16, 2022
In 2018, Binance invested $3 million on the Terra project, and received 15 million LUNA tokens in return. At the cryptocurrency’s all-time high, these were valued at over $1.6 billion, or 560 times the initial investment.
However, CZ says that these tokens are still on the platform’s wallet and have never been sold. With the collapse of the Terra ecosystem, its UST stablecoin and LUNA, this investment has literally melted away and is only valued at $2500 at the time of writing.
However, at the same address, Binance also has $12 million of UST. These were generated through staking, notably thanks to the 20% annualised returns offered by the Anchor protocol. Moreover, these funds would have been valued at over a hundred million dollars if the UST price had not depeg.
Binance profits returned to users
At the end of this series of tweets, Changpeng Zhao announced his willingness to contribute to the war effort. He announced that the $12 million UST will be returned to the Terra team for distribution to users affected by Terra’s collapse:
“To show that we are not only a good company, but also a good company.
“To set an example of protecting users, Binance will relinquish its funds and ask the Terra project team to compensate users first, and Binance last, if necessary. “
While very little information has yet been revealed about who this compensation will affect, it is believed to be only users of the Anchor protocol. This initiative has been widely supported by the ecosystem, noting that Binance was under no obligation to do so.
However, as is often the case, the announcement was also met with disappointment. Many users complained about being left behind, especially those who had locked in staked USTs on Binance and were unable to jump ship before facing the storm.
As a reminder, the Terra ecosystem had a nightmare week. The UST, the third most capitalised stablecoin in the market, fell and broke away from the dollar, dragging down the LUNA. Nearly $20 billion has evaporated, resulting in huge losses for investors.
