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Binance Recovered From $1.6 Billion LUNA Losses

Binance CEO has disclosed the internal leadership team’s communication logs from the Terra controversy.

The documents reveal a conversation between CZ and Binance’s head of product Mayur Kamat in which they discuss what to do with Binance’s 15,000,000 LUNA, which was formerly valued at $1.6 billion. The coins were part of Terra’s initial $3 million investment and are now worth only $2,700.

CZ stated in a tweet thread from May 16, “Binance will let this go and ask the Terra project team to compensate retail users first and Binance last, if ever.”

The capacity to opt to forego billions of dollars in order to prioritize its users is unheard of in traditional capital markets. A CEO has a fiduciary duty to make decisions that benefit the company rather than the customers.

Although the interests of both groups are frequently correlated, Binance could have saved hundreds of millions of dollars by selling its LUNA tokens during the crisis. Not doing so prevented the situation from deteriorating further (if possible), and Terra LUNA will delete 15,000,000 LUNA coins from the new LUNA fork. According to Kamat’s analysis of the events, “You will see signs that tell you that you are working in an extraordinary company. It will usually be in decisions made when things were hard. That said I have never worked anywhere where we made them this quickly. Money is fungible, even in large amounts. But user trust is much harder to gain and much faster to lose. Prioritize the importance and protect the users the best you can.”

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Kamat’s rationale presents a compelling case for Binance’s decision to let billions of dollars disappear being in its long-term best interests. Users may choose a corporation that is believed to safeguard its users at a significant cost to itself.

However, even if Binance had chosen to, it is plausible that it could not have done anything about the $1.6 billion LUNA coins. This might all be a PR stunt, with the screenshots being released as part of a larger push to enhance the company’s positive image. Accessing private keys for exchange-held wallets is infamously difficult by design. To protect against embezzlement and fraud, multi-sig wallets or sharing private keys among key leadership members are frequently employed.

It took less than 48 hours from May 9 for LUNA to fall 98 percent to $1 per coin. UST was trading around $0.21 at this moment, and Do Kwon and the LFG team began selling tens of thousands of Bitcoin to reestablish the peg. By May 11, UST had reached $0.79, indicating a comeback. However, due to the algorithmic link between UST and LUNA, the latter dropped to $0.00000136 by May 13.

Binance’s LUNA tokens were only worth $20.40 at this point. On May 16, CZ said that Binance would not be relocating or selling its 15 million LUNA. As a result, unless Binance elected not to sell the LUNA coins before May 10, the coins have no real worth.