Exchange of cryptocurrencies As the Terra-based stablecoin tries to regain its peg to the US dollar, Binance has banned withdrawals of LUNA and UST tokens.
Binance announced the temporary restrictions in a blog post this morning, blaming network congestion for “a huge volume of pending withdrawal transactions.”
“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.
The announcement comes amid a period of significant volatility for Terra’s algorithmic stablecoin UST, which has fallen substantially against the dollar in recent days. UST is the third-largest stablecoin by total issuance behind USDT and USDC.
To strengthen UST, significant efforts have been made. The Luna Foundation Guard (LFG), a Singapore-based nonprofit dedicated to supporting Terra-based stablecoins as well as the broader Terra ecosystem, has revealed a plan to lend $1.5 billion in bitcoin and UST to third-party trading firms in order to support UST’s peg on May 9.
Despite this, the price of UST has fallen in comparison to USDT, the largest dollar-pegged stablecoin. On Monday, according to Binance data, it hit a low of $0.6065. In the hours following, it has rebounded to roughly $0.85.
Meanwhile, according to CoinGecko, the price of LUNA, the Terra blockchain’s native asset that may be burned in exchange for UST in normal market conditions, has dropped from over $62.50 just 24 hours ago to around $28.50.
Terra and LFG must also deal with significant volatility in the larger crypto markets. Yesterday, the price of bitcoin fell below $30,000 for a brief while before rising to roughly $31,500.
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