Proposal #12201 : Public Inquiry into Binance’s Custody of Terraform Labs Remaining LUNC and USTC Holdings Formerly UST & LUNA
Introduction
After Terraform Labs collapsed in 2022, many questions appeared about what happened to their LUNC and USTC tokens. A community proposal has been made to verify and disclose the remaining Terraform Labs tokens held on Binance and to ensure these tokens are burned as required by the court. The proposal aims to bring transparency, confirm compliance with the Final Judgment, and protect the Terra Classic network. If executed, it could lead to the destruction of a significant portion of the USTC supply, potentially up to half. This article explains the situation in simple terms and why the proposal is safe.
What Happened to TFL Tokens on Binance
Terraform Labs sent large amounts of USTC and smaller amounts of LUNC to Binance using deposit memos.
A deposit memo is a code that tells Binance which account the money belongs to. Even though many users send tokens to the same Binance address, the memo keeps each account separate.
This means tokens from other users or investors are not affected. Only the tokens that match Terraform Labs deposit memos are part of this proposal.
Why Transparency is Important
The court case SEC versus Terraform Labs requires all Terraform-related tokens to be burned or made permanently inaccessible. Most on-chain tokens have already been burned. However, some tokens on Binance have not been confirmed as burned.
The proposal does not ask Binance to show all user funds. It only asks Binance to show the status of tokens that belong to Terraform Labs according to the court order.
How CEX Wallets Work
Centralized exchanges like Binance use shared addresses for deposits. The memo tells Binance which user account should receive the deposit.
For example, two different users could send tokens to the same address but with different memos. This keeps their funds separate.
Because Terraform Labs transactions have unique memos, it is easy for Binance to separate TFL tokens from other users. Retail users’ funds are not affected.
Why the Proposal is Safe
- It does not accuse Binance of wrongdoing.
- It does not touch any retail or investor funds.
- It asks only for compliance with the existing court order.
- It is fully aligned with legal requirements and blockchain data.
- It supports transparency and trust in the Terra Classic community.
Even though Binance controls the deposit address, the unique memos allow them to identify the TFL tokens accurately without affecting other users.
Benefits of the Proposal
- Confirms that Terraform Labs tokens are burned according to the court ruling.
- Reduces uncertainty in the Terra Classic network.
- Protects Binance from legal or operational risks by helping them follow the law.
- Strengthens trust and credibility in the community.
Transparency and compliance are standard practice in blockchain and finance. This proposal helps maintain a healthy and trustworthy network.
Conclusion
The community proposal to verify and disclose Terraform Labs LUNC and USTC on Binance is safe and important. It does not involve any retail users. It follows the court ruling and ensures that remaining Terraform Labs tokens are properly burned.
If executed, this proposal could destroy up to half of the USTC supply, increasing transparency, protecting the Terra Classic network, and strengthening trust in both the community and Binance.
References
- SEC v. Terraform Labs Final Judgment
- Verified blockchain transaction data linking TFL wallets to Binance deposit memos
- Terra Classic community proposals and burn records
