- Changpeng Zhao recently expressed his thoughts on the LUNA and UST collapse.
- Zhao stated that “the Terra team was slow in using their reserves to restore the peg.
- According to Changpeng, things really started taking a turn for the worst when more LUNA was minted in an attempt to salvage the situation.
The CEO of Binance, Changpeng Zhao, recently expressed his thoughts on the LUNA and UST collapse. According to Zhao, the collapse of Terra’s native tokens could have been avoided if the Luna Foundation Guard (LFG) used its Bitcoin reserves earlier.
Zhao stated that “the Terra team was slow in using their reserves to restore the peg. The entire incident may have been avoided if they used their reserves when the de-peg was at 5%. After the value of the coins had already crashed by 99% (or $80 billion), they tried to use $3 billion to do the rescue. Of course, this didn’t work.”
Things started going south for Terra when the price of the algorithmic UST stablecoin experienced a free fall of such a magnitude that it hit lows of $0.225 from its $1 peg.
LUNA left people in shock when it lost nearly 100% of its value overnight after reaching the near-zero level.
According to Changpeng Zhao, things really started taking a turn for the worst when more LUNA was minted in an attempt to salvage the situation. Zhao pointed out that “printing money does not create value; it just dilutes existing holders. Exponentially minting LUNA made the problem a lot worse.”
The Terra crash led many to speculate whether there was something sinister happening behind the closed doors of the network founders. Do Kwon, the CEOof Terraform Labs, could even be facing Ponzi fraud charges. There are even claims that Terraform Labs was dissolved on April 30, mere days before the Terra tokens collapsed.
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