The Terra LUNA organization, the Luna Foundation Guard (LFG) has thousands of Bitcoins (BTC) that were meant to stabilize the value of UST. But what happened was the opposite. Where did those billion dollar Bitcoins go? Has been sold?
In March 2022, LFG, an organization from Singapore affiliated with Terraform Labs, held a “Bitcoin Standard” practice program so that the value of stablecoin UST not only use LUNA crypto as the stake.
It was revealed at that time, that massive Bitcoin purchases had been made since the beginning of the year.
Until a few weeks ago, LFG still had Bitcoin reserves equivalent to US$3.5 billion. However, after the prices of UST and LUNA fell to their lowest point, the public asked whether it was true that BTC was used to save the two cryptocurrencies? Or have they all been sold and made the crypto market even more critical?
There are many answers. One that is quite detailed is the result Dr Tom Robinson’s study from the Elliptic research institute, last Friday (13/5/2022).
“This week we saw the price of UST fall. Instead of the equivalent of 1 dollar, the price fell to US $ 0.04. Even the holders of UST’s worth of billions of dollars lose very badly,” said Tom at the beginning of the study.
LFG has indeed launched an astonishing program. They plan to buy $10 billion worth of Bitcoin in the long term and around $3 billion in the short term.
That much Bitcoin would have been used as a peg for UST, in addition to using the LUNA crypto.
“Between January and May 2022, there were around 80,394 BTC worth US$3.5 billion at the time, bought by LFG,” said Tom.
He continued, when the value of UST began to fall on May 9, 2022, LFG announced that it would start dumping its Bitcoin reserves and buying UST.
This is the first step to trying to keep the UST peg at 1 to 1 against the US dollar.
“During the next few days, Bitcoin LFG is actually emptied. The balance is now zero. Well, because of the value stablecoin UST continues to decline, the public is asking about the fate of LFG’s bitcoin reserves, and whether they are actually being used to support value stablecoin UST. Here we have the answer, at least the question of where the BTC funds are going,” said Tom.
Tracking Bitcoins belonging to the Terra LUNA Organization
On the morning of May 9, 2022, LFG announced that it would lend US$750 million worth of BTC to an OTC trading company (over the counter) to help protect the UST stake.
Terralabs founder Do Kwon later clarified that Bitcoin would be “used for” trading“.
At about the same time, 22,189 BTC (worth US$750 million today) was sent from address Bitcoin associated with LFG, to address new.
Later that night, another 30,000 BTC (worth US$930 million at the time) was sent from another LFG wallet, to address this same one.
Within hours, this entire 52,189 BTC was then transferred to a single account on the Gemini crypto exchange, in the US, with multiple transactions.
“Unfortunately, it is difficult to track further asset flows or identify whether the BTC was selling to support the UST price,” Tom admitted.
He continued, this leaves 28,205 BTC in Terra’s reserves. At 01:00 UTC on May 10, 2022, that BTC was moved in its entirety, in one transaction, to a single account on Binance.
“Once again it is not possible to identify whether these assets were sold or later transferred to another wallet,” he said.
Tom closed the study with a statement that those who want to get “compensation” due to the collapse of the UST, are very dependent on the status of LFG’s Bitcoin.
That sentence can be interpreted, that LFG could be responsible for the loss and not transparent about Bitcoin as part of the UST stake. [ps]