The Market and the Terra Subset

The crypto market has gone through some shaking over the past couple of weeks in the lead-off to the collapse of Terra’s ecosystem and the eventual collapse. Terra (LUNA) was once among the five most valued crypto assets by market capitalization.

 Nevertheless, in the midst of all the developments, rumors began to flow on various social media platforms that Binance had huge stakes in the Terra ecosystem, and has also incurred heavy losses.

Consequently, the CEO of Binance, Changpeng Zhao, has made an appearance to clarify issues regarding the subject matter. CZ, as he is popularly known, took to his Twitter page to say that he first needs to address the falsehood being circulated on “crypto Twitter.” 

He made it clear that Binance did not take part in the second round of the fundraising LUNA had, and neither did Binance buy any UST.

CZ stated further that Binance Labs had made an investment of $3 million in Terra’s layer Zero blockchain in 2018. But UST came up at a later date after the first investment had been made.

In addition, Zhao told his followers and anyone interested that Binance has made investments in many crypto projects in the course of the past four years. He said some of them have outperformed their projections and some others have failed. It is simply how an investment works.

CZ Questions Terra on Its Bitcoin Reserves

Since Terra’s ecosystem collapsed and the market got thrown into a frenzy, some players have started to suggest means that could lead to recovery. On the long list of suggestions, one of the most recent has been to hard-fork the Terra 2.0 project, get a snapshot of individual and corporate holdings before the occurrence, and give holders of LUNA the new LUNA 2.0.

In CZ’s response to that idea, he simply said that it will not work. He explained that having to fork does not give any value to the new fork. It is simply wishful thinking to think of voiding all transactions after a snapshot, either off-chain or on-chain.

The most important question for him was what Terra is doing with the Bitcoin in its reserves. The Bitcoin, according to plan, was meant to preserve the Dollar peg of the UST. He asked a question; should all those Bitcoin not be used to purchase the UST as designed?

In his most recent thread, CZ equally noted that in the last couple of days, Binance tried so hard to give support to Terra and its community. He said further that his tweets are just to point out likely issues that might come up, according to his understanding.

CZ said that forking or minting do not create any value but burning and buying back do create value but the process demands funds. To make matters worse, the project team might not have these funds. To that effect, CZ said he would appreciate seeing more transparency from the team.