In his newly published autobiography, Binance CEO Changpeng Zhao (CZ) revealed a stunning investment story: a $3 million purchase of LUNA tokens in 2018 had ballooned to a staggering $1.6 billion just before the Terra ecosystem crashed. Despite this mind-boggling paper profit, Binance decided not to sell any of its holdings.
From $3M to $1.6B: A Wild Rollercoaster
According to CZ's account, the investment was initially a modest bet within Binance's ecosystem expansion. In 2018, Terra was still an obscure project, and LUNA tokens were cheap. Binance bought in with $3 million. Over the following years, as the Terra ecosystem — especially the UST stablecoin — gained traction, LUNA's price skyrocketed. By the peak of the 2021 bull run, Binance's LUNA stash was worth $1.6 billion, representing a significant chunk of the exchange's portfolio.
Yet CZ stressed that Binance never considered cashing out. “If we had dumped our holdings on the market, it could have triggered a panic and left retail investors in the dust,” he wrote. “During extreme market conditions, industry leaders must bear the responsibility of stabilizing sentiment.”
Why Hold? The Decision-Making Logic
Faced with such enormous paper gains, Binance's internal discussions did consider partial sell-offs. But CZ overruled them for three key reasons:
First, maintaining market confidence. A large sell order from a top exchange would be interpreted as a vote of no confidence in Terra, potentially triggering a stampede. At that point, LUNA was already highly sensitive to sentiment shifts.
Second, avoiding moral hazard. CZ believes that institutional investors fleeing before retail investors would severely damage the industry's credibility. “We couldn’t jump off the lifeboat ahead of the passengers,” he wrote.
Third, long-term perspective. Binance viewed its Terra investment as strategic, not speculative. It believed in the long-term vision of an algorithmic stablecoin ecosystem. Even after the collapse, CZ said he felt “regret but no remorse” for the decision to hold.
Lessons from the Terra Implosion
In May 2022, the Terra ecosystem collapsed within days. LUNA crashed from nearly $120 to near zero, wiping out Binance's $1.6 billion position. The debacle sent shockwaves across crypto and led regulators worldwide to scrutinize algorithmic stablecoins.
CZ acknowledged in the book that the investment ultimately went to zero, calling it a “painful lesson.” Nevertheless, he maintained that the decision not to sell actually bought time for some users to exit more orderly. He also pointed out that Binance kept LUNA and UST deposits and withdrawals open throughout the crisis, unlike some exchanges that halted services.
Industry Implications: Responsibility vs. Risk Management
While the trade ended in disaster, CZ's principle of “don’t exit ahead of retail” has sparked debate. Some praise his sense of responsibility; others argue that holding an unhedged position of that size is a failure of risk management. Regardless, this episode has become a case study in crypto history — illustrating both the surreal profit potential of early-stage investments and the ethical dilemmas faced by market leaders during extreme volatility. As of writing, the original LUNA token (now rebranded LUNC) trades at around $0.0001, down over 99.99% from its peak.