Why does Binance suspend LUNA and UST withdrawals? Binance, a cryptocurrency exchange, has halted withdrawal of LUNA and UST coins because the Terra-based stablecoin is failing to hold its value against the USD.
In a blog post earlier today, Binance announced the temporary suspensions due to “excessive volume of pending withdrawal transactions” as a result of network 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,” the company added.
Binance suspends LUNA and UST withdrawals
The announcement comes amid a period of significant upheaval for Terra’s algorithmic stablecoin UST, which has tumbled in value against the dollar in recent days.
The UST ecosystem has made significant strides. On May 9, the Luna Foundation Guard (LFG), a Singapore-based nonprofit formed to assist both terra-based stablecoins and the broader Terra eco system, announced a strategy to lend $1.5 billion worth of bitcoin and UST to third-party trading companies in order to help maintain the peg of UST.
Despite this, the price of UST has continued to drop against USDT, the largest dollar-pegged stablecoin. According to Binance data, it was as low as $0.6065 on Monday. It has recovered somewhat since then, hovering around $0.85 at the time of writing.
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Meanwhile, the price of LUNA, the Terra blockchain’s native asset that can be destroyed in exchange for UST in normal market conditions, has dropped from around $62.50 just 24 hours ago to roughly $28.50 as of press time, according to data supplied by CoinGecko.
The cryptocurrency market is particularly volatile at this time, and it’s not difficult to see why. Aside from that, there’s a lot of volatility in the broader crypto sector for Terra and LFG to deal with. Yesterday, bitcoin briefly dipped below $30,000 before recovering to around $31,500 at publishing time.
