The announcement comes after reports that over a billion dollars of Terra’s bitcoin reserves are unaccounted for.

The Luna Foundation Guard (LFG), official stewards of Terra’s bitcoin reserves, released a statement on Monday documenting how it disbursed millions of dollars worth of crypto in its failed attempt to maintain the peg of stablecoin terraUSD (UST).

In the statement, LFG notes that its BTC reserves have depleted almost entirely — from around 80,000 BTC to about 300. The remaining assets, which mostly comprise of the crashed UST and LUNA tokens, will apparently be used to compensate investors.

In one of the calamitous events in crypto memory, the $40 billion Terra ecosystem collapsed last week when the UST stablecoin — which is supposed to be worth $1 — dropped below 20 cents. The LUNA token, which is designed to serve as a sort of shock absorber for UST’s “algorithmic” dollar-pegging mechanism, crashed from $80 to below $0.002.

In a tweet on Monday, LFG said it sold off most of the BTC in its reserves for UST as Terra’s ecosystem was beginning to collapse early last week.

LFG said it transferred over 50,000 BTC “to trade with a counterparty” on May 8, as the UST price was originally starting to slump.

It said the funds were used for “directly executing on-chain swaps and transferring $BTC to a counterparty to enable them to enter trades with the Foundation in large size & on short notice.”

On May 12, LFG says another 30,000 BTC from its reserves were sold off by Terraform Labs (TFL), the original company behind Terra, “in a last ditch effort to defend the peg.”

LFG confirmed the remainder of its reserves, which once totalled over $3 billion, have sunk almost completely as a result of the unsuccessful effort to defend UST.

LFG says these funds will be used “to compensate remaining users of UST, smallest holders first.”

Monday’s statement from LFG comes amid criticism that Terra’s reserve funds — which were supposed to belong to the “decentralized” Terra community — were handled with a lack of transparency by Terra’s centralized leaders and investors.

It also comes after leading figures in the blockchain space, including Ethereum Founder Vitalik Buterin, have called for Terra to compensate smaller holders of UST and LUNA before its largest investors.

UST’s price plummeted further in response to Monday’s announcement — from $0.15 to $0.07.

The post Luna Foundation Guard Left With 313 Bitcoin After UST Crash appeared first on Crypto Insider.

The move comes after UST briefly lost its peg to the U.S dollar over the weekend.

Luna Foundation Guard (LFG) will lend $1.5 billion in bitcoin (BTC) and TerraUSD (UST) to defend the peg of its algorithmic stablecoin to the U.S. dollar.

In a tweet thread, the Singapore-based LFG said it would loan $750 million worth of BTC to trading firms to help protect the peg and also loan $750 million in UST to accumulate bitcoin to help normalize the market.

“The traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize,” LFG wrote in the thread.

UST relies on another token, LUNA, to keep its price of a dollar via a set of on-chain mint and burn mechanisms and is one of the largest algorithmic stablecoin.

In a separate tweet thread, Do Kwon, the project’s founder, said that the move to loan out $750 million of bitcoin shouldn’t be seen as LFG trying to exit its BTC position but rather increasing the liquidity around the UST peg. LFG will buy more BTC if UST expands from here, which we think is the more likely outcome,” Kwon said.

Over the weekend, the UST briefly lost its peg to the U.S. dollar, falling to $0.987 before climbing back to $1. At the same time, LUNA dropped 10%.

Part of the reason why UST briefly broke its peg was the large quantities of UST that were withdrawn from liquidity pools on decentralized exchange Curve, while $192 million of UST was dumped.

The post Luna Foundation Guard Lens $1.5B in BTC and UST for Stablecoin Peg appeared first on Crypto Insider.

The organization, which splurged on the cryptocurrency last week, resumed buying BTC on Wednesday after a one-day hiatus, according to one observer.

Bitcoin remains on the hunt for a move above the 200-day average as Luna Foundation Guard (LFG), a non-profit organization focused on UST, resumed buying the largest cryptocurrency after taking a break on Tuesday.

LFG has purchased 5,773 BTC, worth $272 million, this week, the foundation’s confirmed bitcoin address showed at 09:42 UTC. Nearly half was purchased on Monday and the rest a few minutes before press time. Last week, it acquired about $125 million of BTC each week day.

“The foundation had a trading hiatus after Monday’s big purchase. It is back today [snapped up 2,943 BTC],” Arcane Research’s Vetle Lunde told CoinDesk in a Twitter chat. “Last week, LFG sent $125 million worth of USDT across all weekdays and $160 million on Saturday to Jump Trading, who executed the BTC trades quickly thereafter.” USDT is the symbol for tether, the world’s largest stablecoin by market value.

LFG announced last month that it had raised $1 billion through an over-the-counter sale of LUNA, the native token of the Terra blockchain, to build a bitcoin-denominated reserve as an additional layer of security for Terra’s decentralized dollar-pegged stablecoin UST, the fourth-largest stablecoin. The funding round was led by Jump Crypto and Three Arrows Capital.

The foundation increased the size of its bitcoin reserve to $3 billion early this month and has been using tether to purchase BTC. Tether helps users bypass market volatility by maintaining a 1:1 peg with the U.S. dollar.

“The reserve will help maintain a UST peg to the dollar during downward peg deviations,” Lunde told CoinDesk in a Telegram chat. The coin has been able to retail the dollar peg by issuing and destroying LUNA tokens. For every UST created, $1 worth of Luna is burned on the Terra blockchain.

LFG has accumulated 30,728 BTC worth $1.45 billion, topping the initial target of $1 billion. The foundation’s ether address now has stablecoins worth $848 million, which can be used to fund further BTC purchases. It could get an additional $800 million by converting its UST holdings to tether.

While there is no formula or frequency for executing purchases and no deadline for building the reserve, the process would be completed in the next two weeks if LFG reverted to it previous buying pattern.

“If LFG continues to buy at a similar rate as last week and the $800 million is not converted, LFG will finalize building the BTC reserve on April 6. Assuming a stable BTC price of $47,000 until April 6, LFG will have 48,800 BTC in its reserve once finished,” Lunde said in Tuesday’s blog post.

“If LFG also spends its $800m UST reserves on BTC, this process will be finalized around April 14, with a further *~17,000 BTC being added to the reserve, leading the reserves to reach 65,000 BTC,” Lunde added.

The implication is that, at least for the short-term, the path of least resistance for bitcoin appears to be on the higher side. Terraform Labs founder and CEO Do Kwon recently tweeted that LFG could eventually increase the size of the reserve to $10 billion.

Bitcoin was last trading near $47,500, little changed on the day. The cryptocurrency rose nearly 13.5% last week, the biggest single-week percentage rise since April 2021, data provided by charting platform TradingView show. According to Arcane Research, LFG’s purchases probably contributed to lifting the market and the foundation’s activity must be closely tracked in coming days.

The post Bitcoin Holds Steady as Luna Foundation Guard Resumes Purchases appeared first on Crypto Insider.