Binance suspended LUNA’s UST stablecoin amid massive sell-off

Crypto exchange Kraken also suspended UST withdrawals

Binance logo displayed on a smartphone with stock market percentages on the background                                 
Binance has suspended TerraUSD withdrawals after the stablecoin hit an all-time low of today of $0.68 – Photo: Alamy
                                

Binance, the world’s largest cryptocurrency exchange by trading volume, “temporarily suspended” withdrawals today for TerraUSD (UST) from 03:20 to 10.50 BST (UTC +1).

The crypto exchange said this was due to due to a “high volume of pending withdrawal transactions”, which caused “network slowness and congestion”.

UST is a stablecoin on the Terra blockchain. According to CoinMarketCap, UST is pegged to the US dollar, however, the stablecoin has lost its peg to the US dollar twice in the past week. UST has also dropped to all-time low of $0.68 on 10 May.

Before restarting withdrawals, Binance had said it would resume withdrawals for UST once it “deems the network to be stable and the volume of pending withdrawals has reduced”.

The knock-on effect on LUNA

Due to the new low reached by UST, its sister token Terra (LUNA) has also decreased in value – down by 48.07% to $31.97. CoinMarketCap describes the crypto as a “blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems”.

In response to the price crash, the Luna Foundation Guard (LFG), which aims to “proactively defend the stability of the UST peg and the broader terra economy”, had announced it will issue loans to defend the UST’s dollar peg.

The LFG will offer $750m (£608m) worth of bitcoin (BTC) in loans to over the counter (OTC) trading firms. Additionally, it will loan $750m UST to accumulate BTC as “market conditions normalise”.

Compared with other stablecoins

UST is the third largest stablecoin by total issuance behind Tether (USDT) and USD Coin (USDC).

Still, both USDT and USDC are both priced at $1 and have spent the last year ranging from $0.99 to $1.002 according to CoinMarketCap.

Crypto exchange Kraken also suspended UST withdrawals.

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