The chat logs of the company's internal leadership team during the Terra crisis have been released by Binance CEO Changpeng CZ Zhao.
The records detail a conversation between CZ and the head of product Mayur Kamat in which they discuss what they can do with Binance's 15,000, 000 LUNA, once worth $1.6 billion. The coins were part of the company's initial $3 million investment in Terra and are now worth just $2,700.
In a May 16 tweet thread, CZ said :
The decision took only five minutes to make, according to the release of the chat logs. Kamat said in a text message to CZ :
The ability to forego billions of dollars to put its users first is something that is very alien to traditional capital markets. A CEO has a fiduciary duty to make decisions that best serve the company, not necessarily its customers.
Both groups' interests are often correlated, but Binance could have saved hundreds of millions of dollars by selling its LUNA token during the crisis. If not done properly, the situation would be even worse and means that Terra LUNA will remove 15,000, 000 LUNA coins from the new LUNA fork. Kamat has a comment on the events, he said.
You will see signs that you are working in an extraordinary company. It's usually made in decisions when things are hard. I have never worked anywhere where we made them this quickly. Money is fungible, even large amounts. User trust is much harder to gain and much faster to lose. Kamat's logic makes a strong case for the decision to let billions of dollars disappear, in the best interest of Binance long term. A company that's seen to protect its users at a significant cost to itself may be a company that users prefer.
Is this just a PR exercise?
It is possible that Binance could not have done anything with the $1.6 billion LUNA coins, even if it wanted to do so. The release of the screenshots is a PR move and is part of a campaign to promote a positive image of the company. Access to private keys for exchange-held wallets is notoriously tricky by design. The use of multi-sig wallets or splitting private keys among key leadership members is often used to protect against embezzlement and fraud.
It took less than 48 hours for LUNA to crash 98%, down from May 9, to just $1 per coin. UST was trading around $0.21, and Do Kwon and the LFG team sold tens of thousands ofBitcoin to restore the peg. There were signs of a recovery, and by May 11, UST had reached $0.79. The algorithmic relationship between UST and LUNA caused the latter to crash to $0.00000136 by May 13.
At this point, Binance's LUNA coins were worth just $20.40. CZ s tweet stated that Binance would not be moving or selling its 15 million LUNA arrived on May 16. Unless Binance decided not to sell the LUNA coins before May 10, the coins did not hold any real value.
It is a nice gesture to the Terra community that one of the original investors will not give up any airdrop so as to not dilute the rest of the ecosystem. An alternative theory is that Binance wants nothing to do with the new chain and may not even list it after its release. On May 27 when the fork occurs, two chains will be created. The new chain will be named LUNA, and the current chain will be renamed LUNC. Will Binance remove itself completely from the Terra system?