With LUNA and UST getting crushed in the market, two South Korean exchanges issued warnings to users dealing with the two tokens.
After a dramatic 90% market crash, LUNA, trading below $5, is now deemed a “cautionary item” by the popular South Korean cryptocurrency exchange UpBit.after the embattled crypto project – Terra’s flagship stablecoin UST – lost its peg with the US Dollar.a warning to its investors while dealing with LUNA. In a bid to protect clients, the exchange designated the cryptocurrency as an “Investment Warning Item.
André Nakano de Melo, the CEO of TITANDAO, highlighted the current problem with UST and LUNA, which is that traders want to get both the tokens out of the exchanges “so they can exploit the arbitrage opportunity by redeeming UST for LUNA.” He also went on to add that “exchanges need to stop the outflows as they might not have enough tokens for all traders that want to withdraw.”“The cold storage of tokens on exchanges does not imply they actually have all tokens for redemption.
The collateral damage on LUNA for UST’s significant deviation was epic. According to Melo, LUNA is following a similar death spiral as TITAN. He said, “UST was trading at close to $0.2 today, so confidence will be hard to regain. I do believe LUNA will eventually go even further down as IRON stablecoin was backed by $0.75 USDC while UST is only backed by LUNA. There is not too big to fail in crypto.”
At times of market stress such as this, it remains to be seen if LUNA manages to prove its viability.
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