In response to criticism over its decision to forgo implementing the 1.2% tax burn on Terra Classic Network tokens, LUNC and USTC for spot and margin trading, Binance, the largest exchange in the world by 24-hour trading volume, has issued a statement.
Binance responded to the harsh criticism by claiming that it has just followed the proposal’s guidelines, which call for a 1.2% tax burn on on-chain transactions like withdrawals and deposits. Binance remarked that because most of its transactions are handled off-chain, it is difficult to impose the 1.2% fee.
But Binance said it would keep an eye on the results of the most recent changes to decide whether to change its mind and impose the tax on spot and margin trading of Terra Classic Network tokens.
“Hi! According to the proposal, we introduced a 1.2% tax burn for on-chain transactions. We settle most transactions off the chain, making it difficult for the tax to be levied. Yet, we would closely monitor the effect of the change and might review the decision.”
Hi! We introduced a 1.2% tax burn for on-chain transactions exactly according to the proposal. We settle most transactions off the chain and this makes it difficult for the tax to be levied. Yet, we would closely monitor the effect of the change and might review the decision.
— Binance Customer Support (@BinanceHelpDesk) September 9, 2022
Terra Investors Are Up in Arms Over Binance’s Recent Decision
A 1.2% tax burn will be implemented for all on-chain transactions of Terra Classic tokens, including LUNC and USTC, according to a statement made by Binance earlier this week. However, it would not affect spot or margin trading; rather, it would only apply to withdrawals and deposits.
Upset Terra investors, who would like the tax applied on spot and margin trading, have blasted Binance for not imposing the 1.2% tax burn on spot and margin trading.
Apply 1.2% tax as required by the community. If you don't know how, ask other exchanges. Don't make us question Binance's credibility. You promised us before.
— arucnak arucnak (@arucnak) September 10, 2022
Changpeng Zhao, the founder of Binance, was criticized by LUNC DAO, a member of the Terra community, for not applying the 1.2% tax burn for spot and margin trading of LUNC and USTC.
Notably, investors of LUNC and USTC believe that the 1.2% tax burn plan is the perfect means of making up for the losses they suffered in May 2022.