Luna Foundation Guard (LFG), the non-profit organisation set up to promote the growth of the Terra ecosystem has revealed in a Twitter thread that it had sold off almost its entire Bitcoin reserve in a failed attempt to prevent the meltdown of its native governance token LUNA and flagship stablecoin UST. LFG had revealed on May 7, the day before UST began to de-peg from its targeted $1 (roughly Rs. 78) parity, it had 80,394 Bitcoin — worth around $3 billion (roughly Rs. 23,355 crore) at the time, along with approximately 26.2 million USDT, 23.5 million USDC, 1.9 million AVAX, 1.6 million LUNA, and 697,344 UST.
After UST began de-pegging on May 8, the LFG admitted to selling all of its Tether and USD Coin reserves for an aggregate of 50,200,071 UST and transferred 52,189 Bitcoin to trade with a counterparty for 1,515,689,462 UST. After its actions had failed to stabilise the system, on May 10, the LFG exchanged an additional 33,206 Bitcoin for 1,164,018,521 UST in a last-ditch effort to defend the stablecoin’s peg.
2/ Consistent with its non-profit mission & focus on the health of the Terra ecosystem, beginning on May 8, when the price of $UST began to drop substantially below one dollar, the Foundation began converting this reserve to $UST.
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
4/ LFG:
· Directly sold 26,281,671 $USDT & 23,555,590 $USDC for an aggregate 50,200,071 $UST
· Transferred 52,189 $BTC to trade with a counterparty, net of an excess of 5,313 $BTC that they have returned, for an aggregate 1,515,689,462 $UST— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
5b/ TFL, on behalf of the Foundation, executed the following exchange trades in a last ditch effort to defend the peg:
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
According to the foundation, this left it with only 313 Bitcoin worth around $9.2 million (roughly Rs. 71 crore) at current prices, about $11.7 million (roughly Rs. 91 crore) worth of BNB, $63.29 million (roughly Rs. 49,272 crore) worth of Avalanche, and an excess of LUNA and UST tokens worth almost nothing at current prices.
7/ On May 12, LFG swapped 883,525,674 $UST to 221,021,746 $LUNA & staked this across a range of validators to protect against a possible governance attack as the amount of $LUNA continued to increase.
All transactions described above have now been completed.
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
9/ All assets will be returned to wallets tagged in https://t.co/PoDWOBJ1Rg shortly – the $LUNA previously staked is unbonding, and will be returned in 20 days.
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
In total, LFG’s reserves are currently worth around $81 million (roughly Rs. 630.5 crore), significantly down from the $4.1 billion (roughly Rs. 31,917 crore) they were worth at their height on May 3.
The LFG said it was looking to use its remaining assets “to compensate remaining users of $UST,” with the smallest holders being first in line. “We are still debating through various distribution methods,” the Foundation said, announcing that updates would follow soon.
