Binance suspends LUNA and UST withdrawals

Binance, a crypto exchange, has announced that it has suspended the withdrawal of UST and LUNA stablecoins temporarily due to bottleneck processes.

This comes after the TerraUSD (UST) stablecoin de-pegged from the US dollar causing its price and that of LUNA to drop drastically. LUNA, for instance, has dropped by more than 85% today.

In an official announcement issued yesterday, Binance said:

‘’Withdrawals for LUNA and UST tokens on the Terra (LUNA) network were temporarily suspended on 2022-05-10 at 02:20 AM (UTC) due to a high volume of pending withdrawal transactions. This is caused by network slowness and congestion. Binance will reopen withdrawals for these tokens once we deem the network to be stable and the volume of pending withdrawals has reduced. We will not notify users in a further announcement. We apologize for any inconvenience.’’

LFG to bring back the stability of its UST by liquidating its Bitcoin reserves

Luna Foundation Guard (LFG), Terra’s organization, has already started looking for ways to bring back the former glory of its troubled UST stablecoin by liquidating its Bitcoin reserves to buy more UST.

A prominent crypto analyst, Colin Wu, explains this by saying:

‘’The Bitcoin address of the Luna Foundation Guard (LFG) has just transferred 28,205.5 Bitcoins to Binance, and the balance of the address is 0 now. The address transferred 42,530 bitcoins out earlier today and then transferred 28,205 bitcoins in.’’

The Bitcoin address of the Luna Foundation Guard (LFG) has just transferred 28,205.5 Bitcoins to Binance, and the balance of the address is 0 now. The address transferred 42,530 bitcoins out earlier today and then transferred 28,205 bitcoins in. https://t.co/93L3GPcd7S pic.twitter.com/LEoUeuZshe

— Wu Blockchain (@WuBlockchain) May 10, 2022

To clarify this, the Luna Foundation Guard noted that its recent update has already started to loan its Bitcoin reserves to MMs.

LFG said:

‘’Last clip withdrawn by the LFG was ~37K BTC. Similar to the last deployment, it has been loaned to MMs. Very little of the recent clip has been spent but is currently being used to buy $UST. Updates coming.’’

Below is the new LFG $BTC wallet address: https://t.co/9t0NX3VEMI

Last clip withdrawn by the LFG was ~37K BTC. Similar to the last deployment, it has been loaned to MMs.

Very little of the recent clip has been spent but is currently being used to buy $UST.

Updates coming.

— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022

But the big question remains, will Terra be able to win back the investors’ trust to use their UST stablecoin even if they get the situation in control?