Binance, the largest cryptocurrency exchange platform in light of UST having trouble recovering its peg to the US dollar, has decided to halt withdrawals of Terra (LUNA) and Terra (UST).
The temporary blocking of withdrawals was revealed in a blog post on May 10th, citing “a high volume of pending withdrawal transactions” for which network congestion is to blame.
The exchange said that “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 revelation comes amid a time of significant volatility for the algorithmic stablecoin of Terra (UST), which has plummeted substantially against the dollar in recent days and is the third biggest stablecoin by overall issuance following Tether (USDT) and USDC.
There is no shortage of attempts in order to strengthen Terra (UST), including the Singapore non-profit organization Luna Foundation Guard (LFG) which was initially founded to support the entire Terra Ecosystem along with the Terra (UST) stablecoin, on Monday revealed that with the goal to get support for the peg of Terra (UST) against the US dollar, has devised a plan which includes lending a total of $1.5 billion in Bitcoin (BTC) and Terra (UST) to third-party trading firms.
Despite this, the price of Terra (UST) has fallen in comparison to the biggest dollar-pegged stablecoin, Tether (USDT). On May 9, according to Binance data, it hit a low of $0.6065. In the hours following, it has rebounded to roughly $0.85 at the time of writing.
However, according to CoinGecko, the value of LUNA, the Terra blockchain’s native currency that may be burned in exchange for UST in typical market scenarios, has dropped from over $62.50 in a 24-hour period to around $28.50 at the time of writing.
Terra and LFG must also cope with significant volatility in the broader cryptocurrency market. The price of Bitcoin (BTC) fell below $30,000 briefly on Monday before rising to roughly $31,500.