Indian crypto exchanges are facing a crisis after cryptocurrency Luna crashed to nearly zero on Friday. The crypto token, which is part of the Terra blockchain, became a casualty of the recent fall in prices of major cryptocurrencies. Exchanges were inundated by tweets from users blaming them for the crash, two industry executives said. Many also took to Twitter to express disappointment.
Indian exchanges had delisted Luna and UST tokens earlier on the day. The Luna token’s value plummeted by nearly 100% in May.
However, while some blamed exchanges for not allowing them to buy Luna, others were worried about their investments being stuck in the token.
Luna is among the most popular cryptocurrencies on Indian exchanges, according to a senior executive from an exchange. Two other industry executives also shared similar views, adding that the popularity could mean that some users would want to “buy the dip” in the hope that it would recover eventually, while others would have made huge losses. “I am from India I invested 1500$ in terra luna . My entire life savings washed away in 24 hours. This is small for you. But for me it is not,” one user who goes by @Chandra64766902 tweeted to Do Kwon, the founder of the Terra platform, which hosts Luna and UST tokens. Another user, @MahabharataS, however asked where they can buy Luna, on Twitter.
The popular cryptocurrency’s crash in India seems to have caused confusion among users in more ways than one. Some users blamed platforms such as CoinDCX for delisting it without any announcement. Crypto exchanges had, however, tweeted and emailed users before delisting the token.
“Huge overnight market volatility caused the collapse of the Terra network, leaving a ripple effect across the entire crypto ecosystem. The prospect of several crypto players with exposure to Luna are under stress. While this is an unfortunate turn of events, we remain confident of a market recovery. As a precautionary measure, CoinDCX has halted transactions for LUNA to protect traders on our platform, and we will continue to monitor developments to decide on our next course of action. The interest of our customers remains our utmost priority and we will continue to take decisive actions to protect them from market volatilities,” said Minal Thukral, senior vice president, growth and strategy, CoinDCX.
CoinSwitch Kuber also sent an email to users informing them that it “enabled a window” for them to recover some value from their investments before the token is delisted. WazirX, too, told users it would provide a way to withdraw their Luna funds. “We will enable Binance free transfer for users to withdraw their Luna funds,“ the firm said on 13 May, before delisting Luna-USDT, Luna-WRX, and Luna-INR trading pairs.
Withdrawal and deposits (from other crypto wallets) of Luna tokens is no longer in the hands of exchanges, as the Terra platform has halted the blockchain system that runs the tokens, said Vikram Subburaj, chief executive, Giottus Cryptocurrency Exchange.
Giottus did not delist the tokens yet, but Subburaj said that though users who hold Luna can trade with others on the platform, they won’t be able to deposit Luna from outside or withdraw their funds for fiat currencies. This is because when funds are withdrawn, or crypto is deposited, it exercises a transaction on the token’s native blockchain, while trading is done on the exchanges internally.
Delisting a risky asset is not wrong, said an executive. However, exchanges will only have to deal with crisis faced by users, but will also suffer if they themselves held reserves in Luna, he said.