Binance lost $1,6 billion in unrealized profits to the collapse of LUNA
According to the head of the exchange Changpeng Zhao, investments have dropped in price to $3400
16.05.2022 - 14:40
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What’s new? Cryptocurrency exchange Binance has lost more than $1,6 billion in unrealized profits from its investments in the Terra (LUNA) token after the collapse of its rate. This was announced on Twitter by the head of the exchange Changpeng Zhao.
2/ Binance received 15,000,000 LUNA (at peak worth $1.6 billion USD, now not much) as part of the original ($3m) invest. 560x return at peak. It still sits on the address we received at 👇. Never moved or sold. Address:https://t.co/6HwTu6CCuB— CZ 🔶 Binance (@cz_binance) May 16, 2022
How did events develop? In 2018, Binance invested $3 million in the Terra ecosystem, receiving 15 million LUNA tokens. According to Zhao, at the asset’s peak price, these investments were worth $1,6 billion. However, the collapse of LUNA and the associated TerraUSD (UST) stablecoin saw them drop in price to just $3400.
As of May 16, 18:00 Moscow time, the LUNA token is trading at $0,00013, down by 30,9% per day, according to Binance.
What does the Binance chief say? The exchange team would prefer that Terra’s retail investors be reimbursed for their lost funds first. Zhao also confirmed that Binance was in talks to invest $300 million in LUNA as part of a recent funding round, but the deal was never finalized.
What events happened before? Ethereum co-founder Vitalik Buterin also urged the Terra team to focus on compensating small investors. He recommended targeting the approach of the US Federal Deposit Insurance Corporation (FDIC) and Singapore's employment law, which offer stronger protection for low-earning employees.
On May 12, the British blogger, KSI, revealed that he had lost $2,8 million on the collapse of the LUNA rate. Then he noted that, despite hyperinflation, he had no plans to sell the assets, which were worth around $1 000. KSI added that he would wait for the exchange rate to recover.
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