- Luna Foundation Guard spent over $3 billion in Bitcoin (BTC) in an attempt to save the falling UST
- Some investors have alleged the foundation secretly bailed out crypto whales as UST crashed
- Details of the expenditure of the LFG reserves raises questions among investors
YEREVAN (CoinChapter.com) – As Terra (LUNA) continues to crash, speculations of a possible rug-pull are doing the rounds. Do Kwon, Co-Founder and CEO of Terraform Labs, has come under the scanner. Luna Foundation Guard has spent over $3 billion in Bitcoin (BTC) of its reserves to save Terra stablecoin UST.
However, according to investors, it has failed to provide enough clarity for its expenditures of the holdings it had before LUNA and UST tanked.
Details of the $750 million in Bitcoin, which the foundation provided as a “loan” to over-the-counter (OTC) trading firms to help protect the UST peg, are also unknown.
On Monday Luna Foundation Guard attempted to clear some doubts when it published its reserve spending.
Luna Foundation blows over $3 Billion: Fails to save UST
As of May 7, Luna Foundation Guard (LFG), a non-profit organization formed to support the growth of the Terra ecosystem, had accumulated 80,394 Bitcoins in its reserve to back UST.
When the value of UST fell below $1 on 9 May, LFG declared plans to back the stable token by liquidating its Bitcoin reserves to purchase UST. As a result, the LFG spent over $3 billion out of its reserves in an attempt to stop the decimation of the Terra USD.
However, despite the reserves, the LFG was unable to save UST. It lost the peg to the US dollar and fell to zero. At the time of press, UST is worth $0.11 per token, according to CoinMarketCap.
On Monday, LFG announced it would look for ways to compensate investors for their losses, starting with the smallest users first. The LFG also revealed its remaining holdings include 313 BTC, 39,914 BNB, 1,973,554 AVAX, 1,847,079,725 UST, and 222,713,007 LUNA (of which 221,021,746 is currently staked with validators).
However, people find it hard to take such claims seriously. The crypto community has lashed out at the founders of Terra for dumping so much Bitcoin (BTC) in a bear market.
“All this time I thought our mission is to buy more Bitcoin to save us from failing fiat. These idiots + Master idiot Do Kwon sold Bitcoin to save their useless fiat coin and they still failed at it,”one user wrote.
Did the Luna Foundation bail out Bitcoin (BTC) whales?
Even though Luna Foundation Guard made public its expenditures and reserves, the public is not buying it. As one user aptly pointed out, there is no evidence yet that the LFG spent $3.1 billion defending the UST peg.
Moreover, many have come out to allege the team behind Terra bailed out crypto whales with bags of UST by allowing them to cash out at close to 100 cents in the dollar. For this, they used popular cryptocurrency exchanges Gemini and Binance.
The allegation made the Luna Foundation come out and publicly deny such claims.
Nonetheless, people are demanding more clarity. They do not understand why some people were allowed to liquidate their holdings early and why the foundation kept it under the carpet. Moreover, traders are demanding details on who exactly the alleged “counterparty”, who received the Bitcoins, is.
At the time, LFG’s publicly-known wallet address holds 312 BTC worth $9 million. However, as the story develops and more details come out, many new skeletons may fall out of Luna Foundation Guard’s closet. After all, where did all that Bitcoin (BTC) go?
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