In his new memoir, Changpeng Zhao, the founder of Binance, reflects on the dramatic failure of the Terra ecosystem and its LUNA token, one of the biggest crypto crashes of 2022.
According to a recent post by Wu Blockchain, Binance Labs invested $3 million in Terra back in 2018, hoping the project’s blockchain would succeed. This investment earned them about 15 million LUNA tokens. By April 2021, during the peak of the crypto bull market, those tokens were worth around $1.6 billion, at least on paper.
CZ says Binance didn’t sell or move the tokens while their value was rapidly increasing. The exchange simply held onto them, demonstrating its strategy of making long-term investments.
The collapse happened in May 2022 when Terra’s UST, a stablecoin designed to maintain a value of one dollar, suddenly lost that value. This caused a rapid and devastating chain reaction, wiping out over $40 billion in just a matter of days.
LUNA’s price crashed dramatically, falling from over $100 to less than a penny. This wiped out nearly all of Binance’s large investment in the cryptocurrency, leaving it worth only a few thousand dollars at its lowest point – even dropping below $3,000, according to Fortune.
This episode highlights how quickly things can change – and how risky – investing in new cryptocurrency projects can be. Binance Labs initially made a small investment that quickly became very profitable, but that success disappeared as a major scandal unfolded in the crypto world.
CZ has consistently stated that their initial investment was in the Terra blockchain itself, not the UST stablecoin that came later. They also confirmed that Binance didn’t invest in any funding rounds after the first one.
The collapse of Terra serves as a stark warning for the entire cryptocurrency industry. It highlighted the dangers of relying on complex, algorithm-based stablecoins, raised serious concerns about how projects are run and how open they are with information, and resulted in significant financial losses for many individual investors.
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2026-04-08 13:41