Binance, the world’s largest cryptocurrency exchange, is set to halt trading of Terraform Labs’ Terra (Luna) and TerraUSD (UST) tokens on its platform following one of the largest collapses in the sector.
The exchange suspended trading of Luna and UST on most of its spot pairs indefinitely on Thursday night after the tokens lost nearly 100% of their value in a matter of days. Additionally, it freezes Luna’s trade on all cross margins and isolated margin pairs.
The move, which follows the exchange of support for futures trading for the Luna token earlier on Thursday, comes as Terraform Labs has increased the circulating supply of Luna tokens to over 6.5 trillion, up from 386 million three days ago (according to Terrascope, a tool that tracks Terra stats) in a bid to nudge its sister token, a supposed stablecoin, back to its 1-to-1 peg to the dollar.
Update: Shortly after the publication of this story, Terraform Labs mentioned he shut down the Terra blockchain and is working to “come up with a plan to get it back together”. This is the second time the Terra blockchain has been frozen today. Earlier Thursday, Terraform Labs briefly shut down the network to prevent any hacking.
TerraUSD, a so-called algorithmic stablecoin, aims to substitute for the dollar by intertwining with Luna, which has no fixed value. The plan is that if the value of TerraUSD falls below $1, it could be “burned” and exchanged for a Luna dollar, and vice versa.
But when TerraUSD fell below $1 earlier this week, the reason for which remains to be confirmed, this algorithmic plan was put to the test and fell apart.
Loss of confidence from the crypto community and aggressive panic selling caused Luna’s price to drop to $0.0000011 from around $80 earlier this week. The value of the UST was 3 cents at the time of publication.
Terraform Labs has been scrambling to find ways – apparently including trying to raise funds – to fix the situation, but so far has been unlucky.