Wednesday, September 28, 2022

Binance Exchange Temporarily Halts Withdrawal for LUNA and UST

Consequent to the volatility of the crypto market in recent days, LUNA, and UST’s inability to hold its value against the U.S Dollar in the past couple of days, Binance has paused its withdrawal for the Terra-based stablecoin until further notice.

The recent development was announced in a blog post earlier this morning by the crypto exchange. As per the post, Binance blamed a large number of withdrawals yet to be processed as a result of congestion on the Terra network as reasons for its decision to halt withdrawals.

The exchange also added that it would reopen withdrawal for the Terra-based tokens once a significant amount of transactions has been processed. Binance’s team will also have to affirm that the Terra network is stable enough, noting that the decision to halt withdrawal is temporal.

The backlog of unprocessed withdrawals resulted from the UST losing grounds to the USD, an action that caused panic amongst UST holders and investors alike leading to a lot of transaction clogs on the exchange platform.

As of press time, other exchanges like Kraken and CoinList have also suspended withdrawals for the coins.

Terra’s LFG to the rescue

In an effort to defend the UST against the U.S dollar, Luna Foundation Guard (LFG), a not-for-profit organization that supports all things Terra, detailed a number of plans on Monday in a tweet thread to bolster the UST.

In the said thread, Do Kwon said the LFG announced that it would lend out $1.5 billion in Bitcoin (BTC) and UST to defend its native coin. The organization added that it would loan $750 million in BTC and $750 million in UST to provide support for UST’s peg.

Terra USD (UST) is a decentralized stablecoin created by Terraform Labs, it works with LUNA to maintain a value of $1.00. It operates an on-chain mint and burns mechanism. In order to mint 1 UST, $1 worth of LUNA must be burnt.

Joyce Onose
A Blockchain enthusiast and growing writer in the space with an understanding of the importance in creating quality content for readers in the industry. Also, keen on using her skills in improving Blockchain journalism.

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