Binance Halts Monthly LUNC Token Burns Amidst Exchange Hack Fallout
Centralized cryptocurrency exchange Binance has suspended its regular burning of Luna Classic (LUNC) tokens, a practice it initiated in early 2023 following the collapse of Do Kwon’s Terra Luna ecosystem. The customary burn, which has occurred on the first of every month since March 2023, was notably absent at the start of November.
Luna Classic (LUNC) represents the original native token of the Terra blockchain. The network was forked by Terraform Labs founder Do Kwon in 2022 as an attempt to salvage his failing project. Kwon was subsequently convicted of fraud and sentenced to 15 years in prison for his role in the Terra ecosystem’s $40 billion implosion. Despite the fallout, the decentralized network has continued to operate, sustained by a dedicated community of supporters who have invested significant resources into its survival.
Binance’s involvement in token burns began after the Terra Classic community voted in late 2022 to implement a burn mechanism for a portion of every on-chain LUNC transaction. The exchange pledged to burn half of the trading fees generated from the token. This commitment materialized as monthly burn events, commencing in March 2023. However, data from StatsB indicates that November’s scheduled burn has not yet taken place.
The delay has sparked concern among some Luna Classic investors. Others, however, attribute the pause to the exchange’s recent record-breaking hack, which occurred last week.
“It is an important sign of support and a vital part of the overall burn campaign,” Dawid Skinder, a brand and user experience ecosystem contributor for Terra Classic, told Decrypt. “It might be that it is just an operational issue after the biggest hack ever. Hopefully that is the case, Terra Classic does not need another problem.”
Binance was reportedly hacked for $6.3 billion on Friday, an incident the FBI has attributed to North Korean hacking group TraderTraitor, also implicated in the Bybit hack. This event has been described as the largest crypto hack in history, with estimated losses four times greater than the previous record of $1.5 billion from the Bybit heist.
The exchange has been gradually reopening withdrawals for various tokens, with the latest phase occurring late Monday for a dozen Ethereum and Solana tokens. This has led some investors to question whether the LUNC burn has been deprioritized as Binance focuses on recovering from the hack.
“Yes, the hack was a problem,” prominent Luna Classic community member Pedro, widely known as Vegas, told Decrypt. “At the moment, we are helping them to keep LUNC and LUNA safe.”
Vegas, who claims to be in direct communication with Binance regarding LUNC matters, though this remains unverified, stated that the exchange is currently undertaking security maintenance post-hack. He added that Binance is reportedly moving LUNC to a more secure wallet before proceeding with the burn.
Binance did not respond to Decrypt’s request for comment.
This is not the first time Binance has paused LUNC burns. The exchange withheld contributions at the end of 2022 after the Terra Classic community voted to re-mint burned tokens for a development fund. Binance only resumed its burns, halving its contribution to 50% of trading fees, in March 2023 after the community abandoned the re-minting proposal.
Luna Classic has seen a 7.9% decrease in value over the past week, trading at $0.0000417, according to Decrypt data. The token remains down 99.99% from its all-time high of $119.18. Investors perceive the pause in Binance’s burn as one of several challenges facing the token.
Skinder highlighted that Luna Classic needs to address its product scarcity, enhance marketing efforts, undergo a thorough audit, and implement defenses against quantum attacks. While expressing belief in a potential revival, Skinder noted the difficulties posed by decentralized governance and “amateur validators.”
When questioned about the rationale for continuing to support Terra Classic, Skinder pointed to its unique history and narrative as the potential catalyst for the “biggest crypto revival ever.” He also cited the presence of over 20 stablecoins awaiting re-pegging and restoration. “Low chance of success, big upside if done. Great history to be part of,” Skinder concluded.
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