Binance CEO Changpeng Zhao (CZ) gave an interview to Fortune magazine where he clarified many questions regarding terra 2.0 and Do Kwon.
Was Binance Irresponsible?
Terra’s and Do Kwon’s crypto-related issues have threatened to drag in the Binance exchange, with some community members accusing the exchange of recklessness. This is after Binance pledged support for the new Terra 2.0 blockchain and the new LUNA token.
However, during a recent interview with Fortune magazine, Binance’s CEO clarified a few things to that effect, starting with the fact that Binance’s actions were purely meant to protect its customers. The exchange needed to provide liquidity for the UST and LUNC holders as they got LUNA airdrops from Terra 2.0. This was a perfect solution, but the customers required support.
“We got a lot of user complaints saying the guys who bought know that they took the risk to buy, even at low prices or high prices. If we stop the liquidity, then it causes problems for them. They could no longer trade. So in the end, we had to take the neutral stance and provide a marketplace with extreme risk warnings.”
Also, it’s on record that CZ had criticized Terra’s response to the crash earlier. Binance had reached out to Terra founder Do Kwon, but the Terraform Labs team was slow to respond. Binance CEO says “Very Disappointed” With How The Terra Team Handled The Luna And UST Incident.
Investigating Terra 2.0:
As previously reported by TheCryptoBasic Binance CEO Calls Its Exchange Investigation Team To Dig Deep Into some Serious Allegations On Terra 2.0.
Binance Got Nothing From Terra
Asked whether Binance made any money from the incident, CZ confessed that Binance was actually in loss, just as everyone else who had invested in the original LUNA (Now renamed Luna Classic). Binance invested $3 million to repurchase 50 million LUNA in 2018.
At the peak of the token’s price, the exchange could have made $1.6 billion if it had sold the tokens. But it didn’t. Also, during UST’s crash, Binance didn’t charge any transaction fees on the stable coin.
Do Kwon To Launch New Stable Coin
CZ took his time to dispel fears that clouded the community about Do Kwon planning to create a new stablecoin and abandon UST.
According to CZ, Binance has supported Luna 2.0 because it’s viewed as continuing the original version. However, if Kwon decides to create a new stablecoin, it will have to go through the usual review to be listed on Binance.
CZ assured us that Binance has a stringent procedure for vetting new coins. An even more profound and heavier vetting would be done on any new stablecoin created by Terra due to the current misgivings about the team.
“If there’s a new stable coin being issued, we will have to look at that new stable coin as a brand-new project. Our listing team will evaluate it in a lot of detail. We will take into obvious consideration of everything that happened.”
CZ Never Spoke To Do Kwon
CZ went on to say that he has never spoken to Terra’s Do Kwon – not even in a group call. Apparently, Do Kwon tried to talk directly to CZ, but the CEO declined, directing the investment team to handle Terra’s issues.
“For the record, I have never spoken to Do Kwon directly. Not even today. During the investment stage, I did not speak to him. Our investment team did all the talking with him.”
Do Known Involvement in Basis Cash:
CZ said he never knew that Do Known was previously involved in a failed stable coin Basis Cash; such information stunned him.
“I was surprised, to say the least. But more so, I was surprised that our team didn’t know about this before.”
Better Due Diligence Needed
There have been reports that before UST, Do Kwon was involved in another stable coin project called Basis Cash that also failed. The CEO said that Binance didn’t know about it and that due to some projects using anonymous founders (like Bitcoin), it’s hard to pinpoint the actual identities of project initiators.
He agreed that the team at Binance needs to improve its due diligence protocols to balance such cases. These strong measures will play out if entities like Terra, as widely claimed, create another stablecoin and want it listed on the exchange.
He went on,
“I think the process should be improved, and we have many lessons to learn. But fundamentally, not every one of these types of situations can be avoided.”