Binance, the world’s largest cryptocurrency exchange, is moving to stop trading in Terraform Labs’ Terra (Luna) and TerraUSD (UST) tokens on its platform following one of the industry’s biggest crashes.
The stock exchange suspended trading with Luna and UST indefinitely over most spot pairs on Thursday night after the tokens lost almost 100% of their value within a few days. In addition, it freezes the Luna trade across all cross-margins and isolated margin pairs.
The move, which follows the stock exchange that draws 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 statistics) in an attempt to squeeze the sister token, a supposed stablecoin, to regain its 1[ads1]-to-1 link to the dollar.
Update: Shortly after the publication of this story, Terraform Labs so it has stopped the Terra blockchain and is working to “come up with a plan to reconstitute it.” This is the second time the Terra blockchain has been frozen today. Earlier on Thursday, Terraform Labs stopped the network briefly to prevent hacking.
TerraUSD, a so-called algorithmic stablecoin, aims to be a replacement for the dollar by merging with Luna, which has no fixed value. The plan is that if the value of TerraUSD falls below $ 1, it can be “burned” and exchanged for Luna worth a dollar, and vice versa.
But when TerraUSD fell below $ 1 earlier this week, a cause that has not yet been confirmed, the algorithmic plan was put to the test and collapsed.
The loss of faith from the crypto community and aggressive panic selling led to the price of Luna falling to $ 0.0000011, from around $ 80 earlier this week. The value of UST was 3 cents at the time of publication.
Terraform Labs has tried to find ways – including reportedly attempts to raise money – to resolve the situation, but so far there has been no success.