Binance CEO explains what should have been done to save the entire market
Foremost, the main issue that has affected the peg of UST is the excessive amount of LUNA minted because of underlying issues in the Terra protocol. Following the turmoil on Terra markets, validators have suspended the entire network, which basically turned off all of the basic functions of the network. No withdrawals or deposits were possible starting from that moment.
5. I am very disappointed with how this UST/LUNA incident was handled (or not handled) by the Terra team. We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg. So far, we have not gotten any positive response, or much response at all
— CZ 🔶 Binance (@cz_binance) May 13, 2022
According to CZ, large amounts of LUNA were minted and moving outside exchanges that stopped deposits, which is why some users thought that selling pressure is fading and they could buy some LUNA in order to break even on their position. But the main issue was that with the opening of deposits and selling pressure would return to markets, causing a continuous drop.
CZ added that he is disappointed with the handling of the situation by UST and LUNA management. Binance requested that they restore the network, burn the excessively minted LUNA and recover the peg, but no response had been received from Terra’s side.
CZ also added that other companies and projects like Axie Infinity acted professionally in situations similar to UST’s as they took responsibility and provided a plan that led to immediate action from their side in addition to help from Binance’s side.
At press time, Luna and UST deposits and withdrawals are blocked on the exchange, as the stability of the currency still remains questionable after Luna hit $0.00001, which is 100% of the price we saw only a week ago. UST still fails to reach $1 and trades at $0.17.