The chief executive officer of the Binance exchange raised questions about the Bitcoin reserved funds by Terraform Labs.
On 9 May, a significant correction in the pegged value of the UST stable coin started, and after that high sell pressure resulted in downfall in the value of the UST coin by 80%. At present time, UST pegged value is $0.2.
Luna coin, the native token of Terra network, was integrated with UST via an algorithm to make the UST coin always a stable coin to $1 value. Due to the downfall in the value of the UST coin, Luna also faced correction and many people lost almost the whole capital investment in the Luna coin.
Just a few months ago, Terraform Labs, the team behind Luna & UST coin, purchased huge amounts of Bitcoin to back the collateral value of the UST coin in terms of Bitcoin by 10% of the all backed funds. At that time, many crypto proponents supported the initiative of Terraform founder Do Kwon but during the crash in the price of Bitcoin, UST users fell under fear and that resulted in very high sell pressure.
On 14 May, Changpeng Zhao, CEO of Binance exchange raised questions on the reserved Bitcoin funds of Terra. Zhao asked where bitcoin funds are and why the team didn’t used that fund to purchase UST coins at that time to maintain price stability of UST coin.
Tweet by Zhao is a clear hint that there is something wrong. Zhao also claimed that the fork plan in the Luna coin can’t result in a real situation with this problem.
Today, Binance CEO tweeted that his personal opinion may not be right for the Terra project team but here in this situation, we have to support Terra to move forward to overcome such issues.
However Zhao supported Terra’s project to move on from this situation but at the same time, he urged the project team to provide deep details of all the transactions to provide full clarity on the reserved funds by the team.
“In this regard, I would like to see more transparency from them. Much more! Including specific on-chain transactions (txids) of all the funds. Relying on 3rd party analysis is not sufficient or accurate. This is the first thing that should have happened.”