While the cryptocurrency community is still trying to decipher Terra’s failed price anchor in the TerraUSD stablecoin (UST), major cryptocurrency exchange Binance suspended withdrawal services for LUNA and UST on Tuesday. Recently, the market value of UST, Terra’s stablecoin, has fallen below $1, while LUNA’s price has also plummeted because of a major sell-off. At the same time, the BTC/UST trading pair on Binance has reached a higher level of $42,000, while other dollar Bitcoin markets are having trouble keeping the price at $30,000. “This has caused a huge increase in BTCUST (not Bitcoin in dollars but according to the UST stablecoin),” said a user on Twitter named Blockchain Backer. As a measure against the ongoing volatility in the Terra ecosystem, Binance stopped all withdrawals on LUNA and UST tokens for 6 hours, citing the reason for the overwhelming volume of pending transactions. Binance announced on Twitter on May 10, “Withdrawals with LUNA and UST on the Terra network have been continued on Binance. We will continue to maintain the network and provide new updates as needed.” According to Binance, the volume of UST transactions waiting to pass is large because of the slow and congested network. While aware of the inconvenience to their investors, Binance stated, “Binance will reopen withdrawals for these tokens once we ensure the network is stable and the pending trading volume has decreased. We will not continue to report on this matter.”
Despite mixed reactions, many users in the cryptocurrency community supported the move. They say binance CEO Changpeng Zhao helped many investors avoid paying their stablecoins at a price of $0.70. While Terra continues to look for solutions to ust’s declining value, many cryptocurrency entrepreneurs including Sandeep Nailwal, polygon’s co-founder, have shown support for Do Kwon, CEO and co-founder of Terraform Labs. Sandeep said on Twitter, “I don’t follow the LUNA/UST ecosystem or community very often, but as a co-founder, I can sympathise with Kwon. He is at the heart of this big event of the industry, facing a lot of pressure and responsibility at such a young age. Good luck to you and luna’s community.” On April 18, UST overtook Binance USD (BUSD) to become the third largest stablecoin in the market, behind Tether (USDT) and USD Coin (USDC) based on market capitalization. Data from CoinGecko shows that ust’s total market capitalization has increased by 15% over the past 30 days at a price of $17.5 billion, which is larger than BUSD’s at $17.46 billion.
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