Binance could have earned $1.6 billion from investments in Terraform Labs and has always prioritised user protection. Zhao, the head of the Bitcoin exchange, said this in an interview with Fortune.
The discussion followed the collapse of the Terra ecosystem. Binance supported the launch of Terra 2.0, although Zhao doubted that the new network would have any value.
Some users asked whether the exchange’s CEO had contact with Terraform Labs head Do Kwon, and whether the platform profited from the collapse. Others accused Binance of exposing users to risk by deciding to list the new LUNA.
Zhao said that the exchange did not profit from investments in Terraform Labs. The platform supported the team in 2018 with $3 million. The 50 million LUNA received were not sold and remain at a public address.
The senior executive explained that all investments are long-term by nature — Binance takes a ‘calm’ view of project failures, as it expects some to be transformed into ‘the new Amazon, Google and Apple’.
According to Zhao, the exchange also did not profit from UST trading due to zero fees.
“We are more focused on users. We have the trust of hundreds of millions of customers. We don’t need to worry too much about ourselves. This is, in a sense, our way of thinking,” he explained.
Zhao acknowledged serious mistakes both in the design of UST and in Terraform Labs’ governance. The latter was manifested in too late a reaction to the loss of the stablecoin’s parity with the US dollar and the use of reserves to restore it.
The Binance CEO also recalled his criticism of Do Kwon’s ‘silence’ and proposals to restart the project. He noted that with regard to the latter there is hardly any ‘perfect solution’.
The head of the exchange explained that backing Terra 2.0 was necessary to ensure liquidity continuity, aligning with the interests of the majority of users. For those who do not hold the asset, Binance has tried as much as possible to inform them of the risks inherent in the coin.
The platform’s CEO promised that if Terraform Labs launches a new version of UST, the compliance team will assess it as a completely new project, taking into account all accumulated experience.
He stressed that the stance would be critical, although he did not rule out allowing the asset to trade. The Binance CEO said the incident should lead to tighter due diligence practices after revelations about Do Kwon’s links to the failed Basis Cash project.
Zhao reacted to accusations by the founder of Terraform Labs and the Terra 2.0 project of fraud by FatMan. The head of Binance tasked the exchange’s investigative team with reviewing them and, if confirmed, sharing the findings with law enforcement authorities.
In South Korea, an interagency group has been formed to investigate the Terra collapse.
Subsequently, it emerged that the Seoul Southern District Prosecutors’ Office issued subpoenas to Terraform Labs employees.
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