The cryptocurrency exchange Binance lost $1.6 billion on an investment in the digital asset Terra Classic (LUNC), whose value collapsed in early May.
We invested $3 million in Terra through Binance Labs in 2018. We received $50 million of LUNA and just kept the coins. Theoretically, our losses didn’t exceed $1.6 billion, and that’s fine,” said Binance CEO Changpen Zhao.
Binance promoted Terra Classic and TerraClassicUSD (USTC) stacking as a “safe way to make money.” However, the company’s customers who blocked the digital assets suffered a huge financial loss because LUNC and USTC went down in value by about 99%.
Because of the PR for Terra project-based investment vehicles, some members of the crypto community speculated that Binance was benefiting from the LUNC and USTC rate dump. However, Zhao refuted these speculations and said that the exchange did not profit from the asset value crash.
Speaking of a $1.6 billion loss, Zhao is likely taking into account the potential profit the company could have earned by investing in another startup.