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LUNA Crashes, Binance Suspends Token Withdrawal

LUNA Crashes, Binance Suspends Token Withdrawal

Last updated 29th Jun 2022
Disclosure
  • Terra’s stablecoin UST dropped to $0.65 yesterday, indicating a potential collapse
  • CoinList and Kraken have also suspended withdrawals

The liveTerra price today is $29.66 with a 24-hour trading volume of $9.7 billion. At the time of publication, LUNA had lost 53% of its value, according to Coinmarketcap data.

Terra’s stablecoin UST dropped to $0.65 yesterday, indicating a potential collapse of the biggest algorithmic stablecoin on the market, CoinDesk reported.

Terra drains Bitcoin reserve to maintain peg

Luna Foundation Guard (LFG), the organization responsible for maintaining the stablecoin’s peg, drained its Bitcoin reserve of $1.5 billion, buying another $850 million in Bitcoin to sustain the peg.

Binance, the world’s biggest exchange, has blocked withdrawals of LUNA and UST tokens due to "network slowness and congestion." The company said in a statement:

Binance will reopen withdrawals for these tokens once we deem the network to be stable and the volume of pending withdrawals has reduced.

Traders can’t sell their UST

On Tuesday morning, traders reported that the LUNA and UST orderbook seemed frozen with no orders going through. Twitter users comment that the highest price UST has been able to command is 70 cents per 1 UST.

Terra’s official Twitter account posted:

If you are using the public infra, please do not spam it at this time as we are experiencing naturally high levels of transaction volume. Please be mindful of our public infra usage.

LFG depletes Bitcoin reserves

At the moment, LFG has $171.4 million in USD and $86.82 million in UST in reserves. This is down 85% resp. 41% from Monday, May 9. They also have $84.5 million in AVAX.

CoinList and Kraken have also suspended withdrawals at this time. According to CoinDesk, FTX is currently still allowing UST withdrawals.

Daniela Kirova

Daniela Kirova

Daniela is a writer at Bankless Times, covering the latest news on the cryptocurrency market and blockchain industry. She has over 15 years of experience as a writer, having ghostwritten for several online publications in the financial sector.