Terra’s LFG takes to Twitter to reveal what happened to its Bitcoin reserves
On May 16 Monday, The Luna Foundation Guard (LFG) published a statement documenting that it only has 313 Bitcoin left in its reserves - a significant decrease compared to its previous 80,394 Bitcoin holding. The remaining reserves, which is mostly made up of the collapsed UST and LUNA tokens will be used to reimburse investors, starting from the smallest wallets.
LFG reports that its Bitcoin reserves are almost depleted
LFG, the organization responsible for maintaining the US dollar peg of Terra’s UST stablecoin revealed it has spent almost all its Bitcoin reserves in an unsuccessful effort to protect UST’s peg and its native governance token Luna.
In the most dramatic event in crypto history, the US$ 40 billion Terra blockchain crashed last week when the UST stablecoin failed to maintain its peg and dropped below 20 cents. Meanwhile, Luna crashed from US$ 80 to under 2 cents.
On May 7, LFG said in a tweet that it held 80, 394 Bitcoin and around 26 million USDT, 23.5 million USDC, 1.9 million AVAX, 1.6 million Luna and 697,344 UST.
On May 8, after the UST began depegging, LFG revealed that it had sold off most of its Bitcoin reserves for UST. It explained the funds were used to directly process ‘on-chain swaps and transferring $BTC to a counterparty to enable them to enter trades with the Foundation in large size and on short notice.’
On May 12, LFG reported that an additional 30,000 Bitcoin were sold off in a last ditch effort to defend the stablecoin’s peg. Around US$ 11 million BNB, US$ 63 million AVAX and a surplus of UST and Luna.
UST dropped further after the reveal - from 15 cents to 7 cents.
According to the foundation, LFG’s reserves are currently worth around US$ 81 million. It is holding only 313 Bitcoin and compared with its US$ 10 billion target reserve in the beginning of May.
Following the reveal, LFG was criticized for handling Terra’s reserve funds with a lack of transparency as the funds were supposed to belong to the decentralized Terra community.