In a recent interview, Binance Co-Founder and CEO Changpeng Zhao (aka “CZ”) shared his thoughts on the recent failure one of the most high profile projects in the crypto space.
As leading digital asset market data provider CryptoCompare said in an excellent comprehensive report (titled: “Exploring UST’s Fall From Grace”) published on May 13, “the recent blowup in the Terra ecosystem has been one of the most impactful events in the history of crypto – comparable with the collapse of Mt. Gox in 2014 and the sharp market crash in January 2018 and in March 2020.”
On May 28, Terraform Labs announced that the mainnet for a new blockchain called Terra 2.0 (which has a native token called $LUNA or $LUNA2 depending on whom you ask) had gone live. As for the old Terra blockchain, its native token is $LUNA or $LUNC depending on which exchange or data aggregator you look at. For example, on Binance, the old and new tokens are called LUNC and LUNA.
Shortly afterwards, most/all of the major crypto exchanges announced support for the new blockchain (which is not a fork of the old Terra blockchain) and its native token.
Anyway, on May 31, Fortune published a transcript of their recent interview with CZ.
Below are a few highlights from CZ’s comments during that interview:
- “I think overall, the whole situation is a disaster. It’s not good for anybody. It hurt a lot of users. A lot of value disappeared. I believe, fundamentally, there were design mistakes in the design of UST, Terra, etcetera.“
- “There was also operational mistakes. The [Terraform Labs] team didn’t respond quickly enough. They didn’t use their reserves to restore pegging when the peg was only a little bit deviated. And then only after it crashed [losing around] $80 billion, they tried to use the reserve of $3 billion trying to recover that. Of course, at that time, it doesn’t work.“
- “We, as one of the largest exchanges, have a large number of users who have this coin. We still need to take care of those users. And the best way is actually to provide liquidity for the new coin, because the new one is going to replace the old one.“
- “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. We have a very quick internal review process, which I’m part of, but I didn’t have to talk to him.”
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