During the most recent AMA session of Binance CEO Changpeng Zhao (CZ), he revealed that several Binance employees suggested trading against their users during the Terra (LUNA) incident and made large profits.
Binance CEO, Changpeng Zhao (CZ)
Some Binance employees suggested trading against their users during LUNA and UST Drawdown
CZ said it would be a “pyrrhic victory” to pursue the gains they could gain by betting against their own users while knowing what was going on with LUNA and UST. The CEO of Binance clarified that it would be an unwise decision for Binance as a business entity beyond ethics. According to CZ, its proponents were fired immediately.
During this session, CZ also answered one of the most common questions about the safety of UST, which is promoted by Binance on its official website and social media accounts.
CZ tells users that this is an “incident” and that sometimes his employees make mistakes. The team used the wrong logo for the project, which caused confusion. He added that users should do their research before investing in crypto-related projects and technologies.
As for the question of the resumption of UST and Luna trading after the crash, CZ told the user that the exchange is operating in the users’ best interests and cannot resume trading that was suspended while the exchanges are closed. Another exchange allows operation with both assets. He added that open trading activities should not encourage users to buy or sell their assets.
“The marketplace is neutral,” CZ added. He expressed his thoughts and opinions on the Terra Luna and UST situation, describing it as stupid and believing it was not a scam. The major flaw was the mechanism that implied that minting more UST would somehow increase its total value. The mechanism criticized by CZ was the core of the whole Terra ecosystem, which allowed for keeping the peg of UST up.
Do Kwon previously faced the same criticism, which is why his foundation decided to start staking additional funds for backing up the stablecoin in case of increased volatility and lack of liquidity on platforms like Anchor. But due to a flawed pegging mechanism and problematic “backing with volatile assets” idea, UST could not hold up its peg and tumbled against the increased selling pressure and lack of exit liquidity. Reportedly, LFG even failed to immediately back its stablecoin with BTC holdings as market makers could not provide enough liquidity right away.
Read more:
- Coinbase’s Blockchain API And Cloud Service Stops Supporting Terra (LUNA)
- 3 Metrics Provide An Overview Of Stablecoin Topography After TerraUSD (UST) Crash
- South Korea’s National Tax Service Levies An Additional $78 Million In Taxes On Do Kwon On Tax Evasion Charges