CZ talks about the Luna disaster: Do Kwon once wanted to contact me, but I refused
Original title: "Binance's CEO speaks out on Terra's rebrand after its epic stablecoin collapse. "I have never spoken to Do Kwon directly.""
Original source: "Fortune" magazine official website
Original compilation: Kxp, Rhythm BlockBeats
Currently, Do Kwon and his company Terraform Labs have relaunched the Terra network and built a The new blockchain and Luna Token will bring the Terra ecosystem back to life.
Binance CEO Changpeng Zhao (CZ) was one of the only exchanges in the UST event to express disappointment with Terraform Labs One of the leaders, and said that even if Kwon and the Terraform Labs team do not take any action, their top priority is to protect the interests of users. However, Binance will still support Terra 2.0, the new LunaToken, and participate in its airdrop. At the same time, investors took a "snapshot" of their legacy token holdings to determine how much Terra owed in the new system.
In this regard, many investors who have lost their life savings have expressed doubts, and do not understand why Binance still believes in Kwon. A Twitter user once lamented: "This is a very irresponsible behavior. I thought CZ would be committed to safeguarding the interests of users."
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Other users have also asked if Binance profited from the collapse of the Terra ecosystem, or if CZ talked to Kwon when things broke, and Kwon is said to have a failed algorithmic stablecoin before UST Item, namely Basis Cash.
To clarify these issues, CZ was interviewed by Fortune on Monday and discussed the collapse of Terra, Binance and The communication between Terraform Labs and Kwon, and why Binance will support the new Terra chain, talked about where Binance can make some improvements. The specific content of the conversation is as follows:
Fortune: After the UST incident, many users think that Binance supports Terra's new chain behavior" Irresponsible” and causing harm, what do you think about that?
CZ: I think overall, this incident was A disaster caused many users to suffer a lot of losses and evaporated a lot of value. It can be said that there are still many mistakes in the design of UST and Terra.
Not only that, they also made operational mistakes and the Terraform Labs team didn't react fast enough. When the signs of decoupling emerged, they didn’t act on them in time, and lost about $80 billion after it collapsed. At that time they tried to use the $3 billion in reserves to try to bail out, but it was obviously not working at that time.
It is understandable that the founders of other trading platforms have remained silent during this incident, but Terra’s project team should not Silent, and there is no timely communication with users. So, I think all these things are going wrong, and I've been emphasizing that.
For Do Kwon's revival plan, I also expressed my concerns and denials on some issues. I think they took a snapshot very early on and a lot of transactions on the blockchain and after the crash were affected. However, we cannot go back to the past, so we can only selectively take care of the interests of a small number of users. Starting a new blockchain, building a fork, does not create value.
This is certainly not an ideal situation, but since the community has voted for it, it proves that this is what most people want results to be seen, and there may not be a more perfect solution.
As one of the largest trading platforms, we have many users who hold this Token, so we must take care of them Interests. In the case that the new currency is about to replace the old currency, the best way is to provide liquidity for the new currency, and at the same time the old Token will become worthless and no longer have any utility. For this reason, we still need to support its sale, although it is not a brand new token that we want to list. We have made risk warnings and sent corresponding emails to new users, but there are still some users who want to buy this token. I really hope they can understand the risks involved.
On May 12th, we only suspended UST and legacy Luna transactions for a few hours while transactions on the Terra blockchain was also suspended. I was thinking: If the blockchain is no longer working, we can suspend transactions to ensure that we will not receive a lot of strange speculation.
Even so, we got a lot of complaints from users that they risked buying if we stopped liquidity Tokens can no longer be traded. So in the end, we had to take a neutral stance and provide users with risk warnings and inform them of the risks.
Fortune: Do you have any concerns about this new Terra chain, are you worried that Do Kwon will launch another Stable coins?
CZ:We can think of the new version of Luna as the old The continuation of the version, although there are some problems in the middle, in order to ensure continuous liquidity for users, we will still support this new chain.
If they issue a new stablecoin, we will treat this new stablecoin as a brand new project. Our listing team will do a lot of professional evaluation and consider every detail. The design loopholes and operational mistakes of the project team will be taken into consideration.
I can't make a hypothetical decision, but we will certainly be extremely strict.
Of course, they may also reflect on their mistakes and create a better project. Many founders have experienced failure, and we will be extra cautious about new projects launched by failed teams. Therefore, we evaluate all aspects and take this project seriously.
CZ: These statements are not accurate, Binance has always been very transparent.
We invested $3 million in Terra in 2018 as part of our Binance Labs investment. We did receive some Luna coins to our public Crypto wallet address at the time, but we never actually cashed out the 50 million Luna coins we received.
This is very similar to most of our investments, which are long-term rather than short-term. We've invested in hundreds of projects, many of which have failed, but that's the risk of VC investing. However, we can hold it for 10 years, 20 years, or we may miss some hidden gems.
So we definitely didn't sell these Luna coins, we didn't buy UST, all the decisions we made were for the community. We're not trying to recoup our investment, it's all our sunk costs. Also, some people accused us of charging fees for Terra UST transactions, which I didn't know about, and my team told me afterward that we didn't actually charge any fees.
When something like this happens, my first reaction is not "how much did we make?" or "how much did we lose ?”, but “How should we protect the interests of users?” This is because, as a profitable platform, we must ensure our own sustainability, so we can manage our own losses. Compared with our own gains and losses, we care more about users. After all, we have a user base of hundreds of millions. As long as users are still willing to trust us, we don't have too many concerns. This is my current thinking.
A lot of things I found out after the fact, and we really didn't make any money. From the current point of view, in theory, our head investment has lost 1.6 billion US dollars, but this does not have much impact.
Fortune: after hearing that Do Kwon may be involved in another failed algorithmstable Were you surprised when the coinproject Basis Cash?
CZ: I am really surprised, but what surprised me even more Yes, our team didn't even know this before.
It is worth mentioning that I have never had a direct conversation with Do Kwon, not even recently. During the investment phase, all communications are done by my investment team using an efficient internal review process. He had contacted some other friends who wanted to talk to me directly, but because the project was handled by my investment team and I didn't know the specifics of it, I turned him down, and didn't even participate in the group call. Typically, these types of matters are handled by our team.
However, I have also been getting updates from the team and have been following the project. I told my team to keep in touch with Terraform Labs and make specific requests. We are the largest liquidity provider for their project, but Do Kwon has been a bit slow to respond and not as aggressive as most other projects.
We do have a mutual friend who is also one of his other investors and this friend told me that Do Kwon wants to Asked me to talk alone, but I also refused. I believe my team can handle this issue well, and I don't want to build a separate communication channel, and I will communicate with him personally.
So, I was surprised by their previous failed projects, because we really didn't communicate at all, and we didn't see himself.
Fortune: I know a lot of Crypto projects are anonymized or pseudonymized, and that's not necessarily a bad thing, But for the case of Do Kwon, does Binance feel that more procedures should be set when evaluating the project?
CZ:I think we should investigate more thoroughly . While we do some background checks, it doesn't necessarily catch everything, like if people are hiding their identities. The founders of some projects are indeed anonymous, such as Bitcoin, but this anonymity is actually a good thing. However, we still need to do more research in this area.
We also have different background check procedures by country and region, and some of them are less than ideal. For example, if someone does not disclose their identity, we may not be able to find out, but I do ask our team to do a thorough investigation.
I don't think it would be helpful for me to be personally involved in the process, even if I had a Zoom call with him, I wouldn't know him He is the founder of Basis Cash. In this industry, I don't know everyone, but most people think I know everyone.
We've invested in a hundred different projects over the last few years and if I talk to all of them , that would be 100 meetings, and I still have our own business to run. We have a relatively strong team and generally pick good projects, but occasionally one such project goes wrong.
I do think the process should be improved and there are a lot of lessons to be learned. But fundamentally, not every type of situation can be avoided.
We need to increase the education of retail investors and remind them not to put all their money in one basket, which is very important .
Fortune: The Terra ecosystem has recently faced multiple user allegations, especially from Twitter with the account name "FatManTerra" user. While most of the allegations have yet to be proven, South Korean authorities are said to be investigating Do Kwon and Terraform Labs. What is Binance's forward-looking plan for the products that the team will launch in the future?
CZ: I did see FatMan's twitter tweet, The content is very interesting, but I'm not sure if it's true or not.
That tweet mentioned a lot of exchanges, names and projects, but luckily Binance was not one of them. Even so, I ask our team to investigate all of these allegations. Inside Binance, we have an investigative team that, while not law enforcement, has a ton of data. We also work closely with law enforcement in almost every country, and they turn to us for help in many situations, and they often help us when we ask for it. We also have many former law enforcement personnel on our team to facilitate communication with law enforcement.
I ask our team to investigate each of these FatMan allegations and remind them to share any conclusions with law enforcement. So far, we have not been able to confirm or deny any of the allegations.
But we should help the community track bad behavior and stop it. So we also do this type of analysis.
We will monitor all developments closely and respond promptly to them. At the same time, I also hope that other players, especially trading platforms, will also participate. There are many different types of users on our platform, and it is necessary to balance their interests, so we must maintain absolute neutrality and transparency.
Tuesday, the day after Fortune spoke with CZ, FatManTerra posted a post about Binance.US (Binance. com’s U.S. partner), calling the team’s investigative procedures and security measures “weak,” and making other allegations that Binance declined to comment on.
Fortune: Binance also has its own stablecoin, I know algorithmic stablecoins are very different from stablecoins backed by official currencies, but after the UST crash, investors are bound to Will be hesitant to invest in stablecoins. Do you think investment in this field will recover?
< b>CZ: I think it's a mixed bag: on the one hand, there must be a lot of people who lost money; but on the other hand, there will definitely be more people looking at algorithmic stablecoins vs. official currencies after this incident The difference between supported stablecoins. At present, people have raised more questions about fiat-backed stablecoins, such as the location of fiat currency reserves, and audit related issues.
I think it's actually a good thing in some ways that more people now understand this and understand the difference. , all stablecoins have risks—in fact, all currencies, even fiat currencies. What we should do is to let people understand these risks, after all, there is no risk-free investment in the world.
We have to make sure people understand what they're holding so they can make good decisions like how to diversify and how much to invest , How much to hold, etc. In my opinion, financial knowledge is the last line of defense for consumers. As industry participants, especially as trading platforms, we really need to carefully manage the currencies that can be traded on the platform. Although in this industry Innovation is very much encouraged, but sometimes things like this happen.
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