Changpeng Zhao (CZ), the CEO of Binance, the world’s largest cryptocurrency exchange, offered his thoughts on what transpired with Luna and cleared several misconceptions about their Terra investment.
The crypto market has been jolted by the collapse of the Terra ecosystem, as the price of LUNA coin, which was formerly among the top-5 cryptocurrencies by market size, has plummeted. Despite the current turmoil, several speculations on Twitter claimed that Binance, a cryptocurrency exchange, was one of the major investors in the Terra LUNA ecosystem.
CZ elaborated on his position in the ongoing dispute and clarified Binance Labs’ Terra investment in a Twitter thread.
Binance did not participate in the second round of investment for Luna, according to CZ, and they did not purchase any UST. Terra was backed with $3 million by Binance Labs, the exchange’s investment arm, in 2018, before UST was established.
He also stressed that his organization tried hard to support the Terra community, and that he was “simply pointing out the potential issues from my understanding” in his previous tweets and would like to see more transparency from Terra’s team, such as detailed on-chain transactions of all the firm’s reserves.
CZ is referring to blockchain analytics firm Elliptic’s tracking of the Bitcoin purchased LUNA Foundation Guard (LFG) to save UST from de-pegging, which has been following the funds’ path to major exchanges Gemini and Binance.
When the value of UST began to fall at the beginning of last week, LFG declared that it would start selling bitcoin and buying UST. While it’s unclear when Terra will reveal details on how the BTC was used, Elliptic pointed out in a blog post that 22,189 BTC (worth about $750 million at the time) was transferred from a Bitcoin address associated with LFG to a new address around the same time.
Later that evening, 30,000 BTC (worth $930 million at the time) was transferred to the same address from other LFG wallets. According to Elliptic, the full 52,189 BTC was moved to a single account at US crypto exchange Gemini within hours via numerous bitcoin transactions.
Terra now has 28,205 BTC in its reserves. On May 10, at 1 a.m. UTC, those remaining reserves were transferred in their entirety to a Binance account in a single transaction. According to Robinson, it’s impossible to tell whether these assets were sold or transferred to other wallets.
The aim of maintaining a significant Bitcoin reserve was motivated to purchase UST to push the price back up toward $1, which is why it was sent to exchanges, but it’s impossible to tell whether it was sold to support the UST price using the blockchain transactions alone.