Luna Foundation’s 80K BTCs down to 313 after it sold $3B in Bitcoin to defend UST

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Tue, 26 Sep 2023, 10:03 PM
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Luna Foundation’s 80K BTCs down to 313 after it sold $3B in Bitcoin to defend UST

The LFC almost depleted its Bitcoin reserves to unsuccessfully defend the UST.

Photo of 3D Animation Production Company of Pixabay

Wed, 18 May 2022, 09:09 am UTC

Aside from Bitcoin’s (BTC) slide below $27,000 and Ethereum (ETH) below $2,000, the crypto market witnessed the shocking crash of the LUNA and terraUSD (UST) stablecoin. As investors pondered what might have caused the collapse, the Luna Foundation Guard (LFG) revealed how it spent billions of dollars in its failed attempt to maintain the peg of UST, a move that almost depleted its crypto reserves.

The company held a number of cryptocurrencies including Bitcoin as reserves and valued at more than $3 billion at that time. “As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets: 80,394 $BTC, 39,914 $BNB, 26,281,671 $USDT, 23,555,590 $USDC, 1,973,554 $AVAX, 697,344 $UST, and 1,691,261 $LUNA,” LFG revealed in a Twitter post on Monday.

Terra creator Do Kwon, who set up the Luna Foundation Guard, previously promised to use the Bitcoin in the event that the UST stablecoin dramatically falls in value, according to CNBC. That’s what exactly happened last week when the LFG sold off most of its accumulated BTCs in a futile attempt to defend the UST.

“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,” LFC stated. “The Foundation did so by 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.”

The $40 billion Terra ecosystem collapsed when UST’s price fell below 20 cents from the supposed value of $1, according to Coindesk. Meanwhile, the LUNA token fell from around $80 to just below 2 cents in what some described as one of the most calamitous events in crypto.

The LFC almost depleted its Bitcoin reserves to unsuccessfully defend the UST. From 80,394 BTCs, the fund is left with just 313 Bitcoins. “As of now, the Foundation’s remaining reserves consist of the following assets: 313 $BTC, 39,914 $BNB, 1,973,554 $AVAX, 1,847,079,725 $UST, 222,713,007 $LUNA (of which 221,021,746 is currently staked with validators).”

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