Luna Foundation Guard, which is responsible for safeguarding the stablecoin UST, has disclosed how it used Bitcoin reserves before the Terra ecosystem collapse. To stabilize the value of UST, the organization sold a portion of its bitcoins directly and traded another on different dates. The reserve contained more than 80,000 BTC.
Luna Foundation Guard Clarifies Reserve Movements
Luna Foundation Guard (LFG), an organization charged with protecting the dollar peg for UST, the algorithmic stablecoin in Terra’s ecosystem, has spoken out to clarify the use of assets that it had. The institution had more than 80K Bitcoin that was to be used in the event of market imbalances that affect the value of Terrausd (UST).
Social media reports indicate that the foundation used almost all its Bitcoin reserves to try to save UST. It was done in three separate operations. LFG sold 26,281,671 HTMLT and 23,555,590 USC in the first transaction. This was the first defensive transaction to the depeg incident.
The LFG also stated it.
Transferred 52.189 Bitcoin to trade against a counterparty, netting an excess of 5.313 Bitcoin they have returned, for an overall of 1,515,689.462 $UST.
The company didn’t identify the counterparty in the transaction.
The peg could not be restored despite the intervention by the LFG. LFG states that Terraform Labs traded the last BTC reserve May 10, when UST’s price was $0.75. This transaction involved the sales of 33.206 Bitcoin, for an aggregate total of 1,164,018,521 UST.
The Luna reserve now consists only 313 Bitcoin. This means that the majority of the Bitcoin owned by organization were used in defense efforts. The reserve also contained 39,914 and 1,973,554 AVX, which were not used but are still in the possession the organization. There is no way to know how they will be used in future.
LFG’s statements help to explain how Terra depeg happened and how these funds were used. An earlier analysis by Elliptic, which is a blockchain analytics company and compliance firm, revealed that most of the funds were sent via Binance and Gemini. The company stated that it was not possible to trace assets or determine if they were sold to support UST prices.