Recent developments suggest that Binance also contributed to the widespread adoption of Terra tokens.
Today, the Financial Times disclosed that Binance, the world’s largest cryptocurrency exchange by trade volume, contributed to promoting Terra’s Anchor Yield program, which lured many investors into adopting the UST stablecoin that collapsed earlier this month.
According to the report, Binance had advertised the TerraUSD (UST) Anchor program on its Telegram page as a safe investment for investors to earn huge returns.
Binance Promoted the Tokens on Telegram
Binance described the scheme as a “safe and happy opportunity” that its clients can venture into in order to earn a 20% mouthwatering profit.
Since the message was posted on the exchange’s Telegram official page, it has been viewed more than 117,000 times by cryptocurrency enthusiasts, who are members of the trading platform’s Telegram account.
No Disclosure Added
Binance’s promotion of UST investment is not the main issue. However, the world’s largest exchange failed to include a disclosure illustrating the risks associated with cryptocurrency investments.
It is worth noting that Terra’s Anchor platform did specify the risks related to cryptos, saying: “cryptocurrency trading is subject to high market risk.”
Aside from the UST investment ads posted by Binance last month, the exchange also promoted Terra (LUNA) staking scheme last year, claiming the investment is safe for investors to venture into.
Binance told the Financial Times “We are now reviewing how campaigns for projects, such as Luna, are evaluated prior to them being advertised”.
Terra Ecosystem Collapse
Unfortunately, things didn’t go as advertised by the world’s largest exchange, as the token ended up suffering one of the biggest crashes since the inception of the cryptocurrency industry.
Both LUNA and UST had suffered massive losses that saw over $80 billion of valuation wiped out in two weeks.
The plunge of UST and LUNA affected a larger part of the market with many believing that Binance played a pivotal role in the widespread adoption of the tokens.
Binance is an established player in the cryptocurrency market and its promotion of any coin will be considered safe by investors.
Following the plunge in Terra ecosystem tokens, Binance told the Financial Times that it is reviewing its procedures for evaluating crypto campaigns before they are advertised to the public.
Binance Advocating for Small Traders
Many investors, including Binance, were largely hit by the collapse of Terra tokens. Binance, which received 15 million LUNA tokens in 2019 for its $3 million investment in the project, saw its investment surge to a high of $1.6 billion last month, before falling to $3,000 last week.
To date, Binance feels guilty for its advertisement of Terra tokens and has constantly criticized the Terra team for the way it is handling the situation.
CZ had previously called on the company to focus on making small traders whole before it would consider major investors.
However, Terra is looking to compensate everyone at the same time. The company’s proposal to create a new chain and new tokens looks like it will be passed on May 27, 2022, with investors expected to receive new airdropped tokens.