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Coinbase users lose Wormhole LUNA, UST after sending it to the exchange

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Coinbase users lose Wormhole LUNA, UST after sending it to the exchange

Coinbase › Exchanges

Coinbase users tried to send wormhole LUNA and UST to their ERC-20 exchange wallets but lost them since they are not supported by the company.

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1 min read

Updated: May 13, 2022 at 12:40 am

Cover art/illustration via CryptoSlate

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During the recent death spiral of UST and LUNA, many tried to send their tokens to their Coinbase wallets, and they ended up losing them altogether. 

The problem emerged from the main Terra bridge’s tendency to transfer wormhole LUNA and UST automatically. As Coinbase does not support wormhole LUNA and UST, users’ tokens disappeared.

It was quickly discovered that many had the same problem when the predicament was posted on social media. 

Anyone else out there try to send UST (wormhole) to your $UST account on coinbase recently?

If so, please contact me so we can organize and work with the necessary parties to find a way to resolve this.@coinbase @CoinbaseSupport @wormholecrypto

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— Radiofriendly123 (@radiofriendly12) May 10, 2022

Coinbase refuses to help

The problem first went public on May 10. Since then, Coinbase didn’t make a statement regarding the subject.

Most posts on both Reddit and Twitter mention that Coinbase refuses to add wormhole LUNA and UST or refund its users. A Reddit post states:

“Coinbase is telling me that they will not do anything about this and the funds are locked while also claiming that if they happen to list Wormhole LUNA/UST one day, the funds will automatically show up…They are obviously able to remediate the situation, but are choosing not to on their own accord. They also are unwilling to escalate this further.”

The first Reddit post on the subject mentions that Binance can recover lost funds in return for a small fee in a similar situation.

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It will be enough to solve the problem if Coinbase adds wormhole LUNA and UST to access the ERC-20 wallets. A full-scale update, including the trading of wormhole assets, is not needed.

So far, individual experiences seem hopeless, and Coinbase’s CEO Brian Armstrong avoids the problem.

Can you return the $UST erc-20 (wormhole) that was received but not credited to my account. Was told it won’t cause it’s wormhole but when deposit it’s doesn’t say anything about not taking $ust just ethereum type which wormhole is

— Haile Selassie I (@FlyHigh407) May 11, 2022

Community is mobilizing

In an effort to raise attention, affected users are mobilizing under a Twitter account named Radiofriendly123. The account tags all Coinbase accounts, asking them to fix the problem every day. For now, it has not received a response.

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Day 1 asking coinbase to support UST (wormhole)@brian_armstrong @wormholecrypto @coinbase @CoinbaseSupport

I know I’m not the only one that was unaware/unfamiliar with the changes made to https://t.co/zXFHBbmqfI$UST

— Radiofriendly123 (@radiofriendly12) May 10, 2022

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Exchanges

Investors furious after LUNA profits removed following “glitch” on Woo X Exchange

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Investors furious after LUNA profits removed following “glitch” on Woo X Exchange

Terra › Rumors

A group of seven investors claim that Woo X reversed profitable LUNA trades of up to $300K due to a glitch in the system

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4 min read

Updated: May 24, 2022 at 10:05 pm

Cover art/illustration via CryptoSlate

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On May 22, CryptoSlate received numerous reports from Investors that Woo Exchange had reversed dozens of trades and thus deleting profits from users’ accounts.

The incidents allegedly took place around May 16 during the UST de-peg event that had an enormous correlated effect on the price of LUNA. Traders within the group claim to have had up to $300,000 in profits removed from their accounts, with some being left with negative balances after removing LUNA tokens from the exchange.

The allegations came from several investors who had provided screenshots of their accounts before and after the event as proof that the exchange removed their profits. The below chart, made by one of the investors, shows the price of LUNA across a several-day period with six wicks down below 0.00001.

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The commentary on the chart, also added by an investor, states that they do not believe the downward price spikes were glitches but rather a “huge whale was dumping their position, which caused the price to fluctuate.”

We reached out to Woo X directly and received the following reply from Ben Yorke, VP of Marketing,

“The WOO X order book encountered an error at around 10:30 UTC, about thirty minutes after trading had resumed on LUNA/USDT. The glitch resulted in a dislocation, with the token being traded at up to 90% less than the market price on other venues.

In events like this, WOO X always seeks to protect the interests of users by ensuring that system-related errors will not result in erroneous losses. The rollback is a common response in both CeFi and traditional finance, protecting users who bought or sold at dislocated prices.

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After a user noticed the glitch and posted it on social media, a small group of users took advantage of the price dislocation. They executed thousands of transactions outside the normal market range in a short time frame resulting in unexpected gains and losses.

WOO X opened a full investigation, and communicated personally with affected users. At the conclusion, the users were awarded with a 10% bug bounty.

As a result, no user experienced any financial loss as a result of the dislocation. WOO X has since resolved the issue that caused the dislocation and implemented more safeguards to ensure that future incidents can be minimized.

Woo X claims that a glitch was responsible for the downward price action causing the price to show “up to 90% less than the market price on other venues.” However, the TradingView chart below indicates that LUNA/BUSD traded as low as 0.00000018 on May 13, indicating an extremely volatile market.

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Except for the few downward wicks, the price never reached anywhere near this price on Woo X. Question can be raised as to why the price of LUNA on Woo X never reached the lows shown on Binance.

Source: TradingView

We reached out to the investors via Telegram and have spoken to many of them directly over the past 48 hours. Upon reading Yorke’s response, one investor commented,

“Woo’s story is wrong… The chart shows that the first spikes down started as early as the morning of May 16. After that many more spikes followed (in the evening of May 16).

They (Woo) are now pretending that they have acted very firmly. Something that Crypto.Com did, by the way, and then apologized. If indeed there was a glitch. Then why did they let traders trade for two days before they stopped trading the pair Luna-USDT.”

A similar event did indeed occur on crypto.com shortly after LUNA was relisted. Kris Marszalek, CEO of Crypto.com, took a different approach stating,

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We will also honor all Luna transactions from yesterday, including those with price glitch ie. there will be no reversals.

Our team is working on the credits for users and it should be done within the hour.

Thank you for your patience as we work through it 🙏 https://t.co/vBpYNoWhiJ

— Kris | Crypto.com (@kris) May 14, 2022

In reply to a question comparing the Woo X response to that of Crypto.com, Yorke stated,

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“Not familiar with the size and the scope of incidents on other exchanges, but seems like others may have made an ad hoc decision to limit negative PR.

At WOO X, we prioritize consistency and fairness with price execution, and as a result, users don’t have to worry about the system executing erroneously and causing them losses.”

There seems to be little explanation for why these downward wicks should be considered erroneous and how it is possible to maintain consistent prices during a black swan event such as the UST de-peg. Many exchanges suffered issues around liquidity and halted trading during the event.

Woo X allowed users to trade on their platform and then apparently reversed trades that allegedly did not suit them. Woo X offered all traders who profited from said transactions a 10% bug bounty fee in response to the incident. Some accepted this, while others believe they are due their funds in full. Regarding the bug bounty, one investor told us,

“the measures taken by Woo are not normal in CEFI and traditional finance, because they have taken 90 percent of the profits from the users who trusted them under the name we protect our users.

This is hypocritical. The users who traded on these opportunities were not aware of any harm. They traded lawfully.”

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Further, another investor claims they have, in fact, incurred considerable losses from this event while refuting that they jumped on a Twitter trading tip,

“I was trading, saw the dips happening right in front of my eyes, decided to put a liw order in and started trading.

Made quite some money, and before I went to bed i sent 75% of that to my bank and bought woo coins with the 25% left.

When i woke up, account was locked. And after a day everything was turned back.. leaving me in a big fat minus on the exchange balance.

As i already spent quite some of that money to debts due to 2 years of corona, i asked support how long i can be in minus.”

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The group, who seem very knowledgable in their understanding of trading, also brought to our attention a case against Quoine, which they believe sets a precedent for their case.

One of the members commented, “I can see why crypto.com’s CEO Kris has abandoned his reversal plan. He has apparently taken good legal advice and happily reversed. Hopefully, Woo will reverse their actions by following crypto.com in their strategy.”

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Altcoins

Litecoin’s privacy upgrade could lead to delisting from South Korean exchanges

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Litecoin’s privacy upgrade could lead to delisting from South Korean exchanges

Korea› Litecoin › Altcoins

Citing the altcoin’s recent privacy upgrade, UPbit and Bithumb issued investment warnings against altcoins, which could potentially lead to delisting.

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1 min read

Updated: May 23, 2022 at 6:24 pm

Cover art/illustration via CryptoSlate

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Two of South Korea’s largest cryptocurrency exchanges, UPbit and Bithumb, issued investment warnings against Litecoin (LTC) on May 23, citing the altcoin’s privacy upgrade.

Both exchanges are considering delisting the altcoin in light of potential legal challenges posed by the upgrade.

Litecoin’s Mimblewimble Extension Blocks (MWEB) upgrade was first introduced in November 2019 and went live last week. It enhances the confidentiality of transactions and allows users to send transactions to the extension block and back to the main chain, obscuring the amount sent and the wallet addresses.

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While Litecoin investors welcomed the heightened privacy, it makes tracking transactions difficult, which is against South Korea’s financial laws. The Act on the Reporting and Use of Specific Financial Transaction Information requires virtual asset service providers to add know-your-customer (KYC) systems and measures against money laundering.

“We are striving to prevent money laundering and terrorism financing through digital assets that have technology that makes transaction records unidentifiable,” UPbit wrote in an announcement. Bithumb issued a similar statement.

UPbit added that any deposits made via MWEB will lead to a permanent loss of funds since UPbit cannot verify the addresses or transaction amounts.

Historically, Korean exchanges end up delisting tokens after similar warning statements. Bithumb and Upbit account for most of South Korea’s crypto trading volume. Coinone and Korbit, two other leading exchanges in the country, are yet to make any statements.

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Created in 2011 from a Bitcoin fork, Litecoin is among the earliest competitors of the largest cryptocurrency. It is currently the eighteenth largest cryptocurrency, with a market cap of $5.13 billion.

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Exchanges

Binance took just 5 minutes to get over loss of $1.6B in LUNA

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Binance took just 5 minutes to get over loss of $1.6B in LUNA

Binance › Terra › Exchanges

Binance CEO, CZ, has released chat logs detailing how the company spent just 5 minutes deciding to let billions of dollars go to zero

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3 min read

Updated: May 23, 2022 at 11:37 am

Cover art/illustration via CryptoSlate

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Binance CEO Changpeng ‘CZ’ Zhao has released the chat logs of the company’s internal leadership team during the Terra crisis.

The records detail a conversation between CZ and Binance head of product Mayur Kamat in which they discuss what to 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.

Giving up billions

In a tweet thread from May 16, CZ said:

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“Binance will let this go and ask the Terra project team to compensate retails users first and Binance last, if ever.”

The release of the chat logs showcases that this decision took just five minutes to decide. In a text message to CZ, Kamat stated:

Source: LinkedIn

Users first

The ability to decide to forego billions of dollars to put its users first is something extremely 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, yet Binance could have saved hundreds of millions of dollars by selling its LUNA tokens amid the crisis. Not doing so stopped the situation from being even worse (if possible) and means that Terra LUNA will remove 15,000,000 LUNA coins from the new LUNA fork. A comment from Kamat reviewing the events reads,

“You will see signs that tell you that you are working in an extraordinary company. It will usually be in decisions made when things were hard. That said I have never worked anywhere where we made them this quickly.

Money is fungible, even large amounts. But user trust is much harder to gain and much faster to lose. Prioritize the important and protect the users the best you can.”

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Kamat’s logic makes a strong case for the decision to let billions of dollars disappear being in the best interest of Binance long term. A company being seen to protect its users at a considerable cost to itself may well be one that users prefer.

Was this just a PR exercise?

However, it is also possible that Binance could not have done anything about the $1.6 billion LUNA coins even if it had wanted to do so. This may all be a PR move, and the release of the screenshots is simply part of a campaign to promote a positive image of the company. Gaining 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.

From May 9, it took less than 48 hours for LUNA to crash 98% down to just $1 per coin. At this point, UST was trading around $0.21, and Do Kwon and the LFG team began selling tens of thousands of Bitcoin to restore the peg. By May 11, UST had reached $0.79, and there were signs of a recovery. However, the algorithmic relationship between UST and LUNA caused the latter to crash down to $0.00000136 by May 13.

At this point, Binance’s LUNA coins were worth just $20.40. CZ’s tweet detailing that Binance would not be moving or selling its 15 million LUNA arrived on May 16. Therefore, unless Binance decided not to sell the LUNA coins before May 10, the coins did not hold any real value anyway.

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Will Binance list LUNC?

Whatever the reason for not selling the tokens, it is still a nice gesture to the Terra community that one of the original investors is willing to forego any airdrop so as not to dilute the rest of the ecosystem. However, an alternative theory is that Binance wants nothing to do with the new chain and may not even list it after its release. Two chains will be created on May 27 when the fork occurs. The new chain will be named $LUNA, and the current chain will rename $LUNC. Will Binance list both coins or choose to remove itself from the Terra system entirely?

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