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Coinan also affected by 'UST crash', Zhao Changpeng confirms only $3,400 market cap left on $3 million investment

By: Abraham May. 18,2022

The collapse of the algorithmic stable coin "UST" continues to fester, involving the world's largest cryptocurrency exchange, Coinan, as well.

On May 16, Coinan founder Zhao Changpeng posted several tweets on social media about the UST project, including that he disagreed with Terra's latest official rescue plan and that Coinan had tried to rescue the UST.

The cryptocurrency community's attention has recently been drawn to the collapse of the UST.

On 7 May, the Terra blockchain's algorithmically stable coin, UST, began to lose its 1:1 parity with the US dollar. Over the next few days, the price of UST fell below 10 cents, and the price of Terra's native Luna token, to which it was tied, also plummeted from $90 to its current price of less than $0.01, close to "zero".

But to this day, the project's official Luna Foundation (LFG) and founder Do Kown are still struggling to launch a rescue plan. The latest news is that Do Kwon, CEO and co-founder of Terraform Labs, has officially proposed forking the Terra network into a new chain with the intention of "starting over".

Coinan founder Zhao Changpeng is also keeping an eye on the development of the story.

On May 16, according to foreign media outlet The Block, the Cryptocurrency exchange has been in talks to invest $300 million in Luna in a recent $1 billion funding round, but the deal never closed.

According to Zhao Changpeng, he did inquire about the rumored "second round of UST fundraising to save the market", but Cryptocurrency did not buy UST.

At the same time, Zhao Changpeng said he forgot to confirm with his team whether Coinan held a Luna position, and upon confirmation, Zhao discovered that Coinan had lost a significant amount of money on one of its Luna investments.

The exchange is reported to have invested $3 million in the Terra ecosystem in 2018, acquiring 15 million Luna tokens. The investment, which had a market value of $1.6 billion at Luna's peak price, was not cashed out by Coinan, however, the value of the investment has now plummeted to just $3,400 due to the collapse of Luna and its associated stablecoin TerraUSD (UST) last week, Zhao Changpeng said.

Given that $3 million is not a huge amount, Zhao Changpeng said he agreed with a previous proposal by the official Luna Foundation to prioritise compensation for retail investors.

"In order to lead by example in protecting users, Binance will let go and ask the Terra project team to compensate retail users first and Binance last, if at all," Zhao Changpeng wrote in a tweet on Monday.

But he also expressed some comments about the UST project side.

Zhao said last week that he was "very disappointed" with the way Luna and the team behind UST handled the crash. When UST founder Do Kwon said he wanted to fork Terra, or create a new blockchain and distribute millions of tokens to backers in a new cryptocurrency, Zhao said he didn't agree with that option.

"It won't work," he said in a tweet.

And according to the public address of the Luna Foundation (LFG), the project is "at the end of its rope". Its bitcoin reserves are reportedly almost completely depleted, down to 313 from a peak of around 80,000 bitcoins, and the rest of its assets have shrunk significantly.

Coinan founder Zhao Changpeng also shared his views on investing, "For me, high returns mean high risk, new projects mean high risk, and don't put all your eggs in one basket. Diversification is very important."

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