Binance, the world’s largest cryptocurrency exchange, is planning to halt trading of the Terraform Labs Terra (Luna) and TerraUSD (UST) tokens on its platform following one of the biggest meltdowns in the industry.
The exchange indefinitely suspended trading of Luna and UST for most of its spot pairs Thursday night after the tokens lost nearly 100% of their value in a matter of days. In addition, it freezes Luna trades across all cross-margins and isolated margin pairs.
The move, which follows the exchange’s support for trading futures contracts for the Luna token on Thursday, comes as Terraform Labs increased the circulating supply of Luna tokens to over 6.5 trillion, up from 386 million three days (according to Terrascope, a tool that tracks Terra stats) in an attempt to push its sister token, a rumored stablecoin, to regain its 1-to-1 peg to the dollar.
To update: Shortly after the publication of this story, Terraform Labs called It has halted the Terra blockchain and is working to “develop a plan to restore it.” It is the second time the Terra blockchain has been frozen today. Earlier Thursday, Terraform Labs briefly paused the network to prevent hacks.
TerraUSD, a so-called algorithmic stablecoin, aims to replace the dollar by connecting to 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 $1 worth of Luna and vice versa.
But when TerraUSD fell below $1 earlier this week, the reason for which has yet to be confirmed, this algorithmic plan was put to the test and collapsed.
Loss of confidence from the crypto community and aggressive panic selling caused Luna’s price to nosedive to $0.0000011 from around $80 earlier this week. The value of UST was 3 cents at the time of publication.
Terraform Labs has been scrambling to find ways – including allegedly trying to raise money – to resolve the situation, but so far it’s had no luck.