What Happened to Terra’s Bitcoin Reserve?

What Happened to Terra’s Bitcoin Reserve?
  • When the stablecoin started to go downhill, the Luna Foundation Guard (LFG) decided to use $1.5 billion worth of Bitcoin and UST from the reserves it held to push UST back to parity with the US dollar.
  • LFG held a stash of over $3.5 billion in Avalanche, Bitcoin, UST and LUNA, with the goal of using that money if UST ever fell below $1.
  • The fall was such that the LFG reserves did not withstand the hard blow, which were almost empty.

The world of finance and markets always has and will have ups and downs, something that will not change in the crypto world either, so it is not surprising that while some crypto assets are on the rise, others are going through a financial downturn.

This is the case of Terra’s UST stablecoin, which presented great instability last weekend, leading it to lose its parity with the dollar, falling to $0.09 cents, while its LUNA cryptocurrency has fallen to $0.0002 dollars per unit. .

Reserves to boost TerraUSD

When the stablecoin started to go downhill, Moon Foundation Guard (LFG), decided to use $1.5 billion in Bitcoin and UST from the reserves held by the project to boost TerraUSD (UST) back to parity with the US dollar.

According to the medium Decrypt This strategy was planned by LFG for a long period, since since the beginning of the year, LFG made the determination to acquire more than $3.5 billion dollars in reserves of Avalanche, Bitcoin, UST and LUNA, in order to use said money if ever UST fell below one dollar.

The strategy was to purchase huge amounts of UST, which would cause a huge buying pressure to exist in the market, thereby allowing the stablecoin to once again rise to its intended price.

failed strategy

As is known, the strategy did not bear fruit and, moreover, it was counterproductive, since a few hours after the loan was launched, the UST asset began a downward spiral that did not stop.

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The fall was such that, by May 10, UST prices reached record lows raising alarms and the LFG reserves did not withstand the hard blow, which were almost empty.

Finally, at the end of last week, UST went almost to knockout by posting prices of $0.13, and being on the mat, took Terra’s native token LUNA with it while virtually wiping out $40 billion in worth.

The resounding failure of Terra’s backup strategy left more than one surprised and perplexed, as well as a palpable question: What happened to those $3.5 billion dollars?

What happened with the money?

To try to provide an answer, the blockchain analysis platform Ellipticalnoted that last Monday, a few hours after LFG’s announcement of the $1.5 billion loan, a Bitcoin address linked to LFG, sent about $750 million worth of Bitcoin to a new address.

Thus, on the night of May 9, it was reported the sending of another $930 million dollars in Bitcoin, through various wallets related to LFG from the new address.

This amount was in total 52,189 bitcoins, which had an approximate value of more than $1,600 million dollars, again moved again, going from the new address to a single Gemini account. This transfer left 28,205 Bitcoins, worth approximately $875 million USD, in LFG’s reserves.

However, the next day, that is, on May 10, early in the morning, said amount was transferred in its entirety to a Binance account.

Tracking the movement of its reserves today, LFG noted that TFL, on behalf of the Foundation, executed sell orders in a last-ditch effort to defend parity. According to the information shared, $33,206 $BTC was sold for a total of 1,164,018,521 UST.

While on May 12, LFG exchanged 883,525,674 UST to 221,021,746 LUNA and staked this through a variety of validators to protect against a potential governance attack.

LFG’s current reserves are: 313 BTC, 39,914 BNB, 1,973,554 AVAX, 1,847,079,725 UST and 222,713,007 LUNA, of which 221,021,746 are currently staked with validators.

It should be noted that, since what happened last week with Terra, many digital asset enthusiasts have begun to have serious doubts about what happened, in addition to completely questioning the transparency of the actions of Terra and its co-founder. Do Kwon.

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