Luna Guard Foundation Empties BTC Reserves As UST Nears Absolute Free Fall

UST in free fall
  • $1.4 billion in BTC asset dumped by Luna Guard Foundation
  • UST neared free fall, losing nearly 4 cents
  • 42,500 bitcoins moved from LGF forex reserves

UST, the stablecoin from Luna has depegged from the dollar and falls freely in an unprecedented dip. The stablecoin is currently trading at $0.6879 according to data from Coinmarketcap and still unhinged at the time of filing this report at 2.36 am, May 10.

The previous unpegging of the UST took place on May 7 at 6:40 pm, during which UST dropped to $0.9913. Luna Guard Foundation, the Singapore-based entity running the stablecoin announced that UST was healthy despite the brief period that it lost its peg to the United States dollar.

UST 24-Hour Volume Spike

The recent unpegging monitored by Cryptoinfowatch shows that it is accompanied by a spike in the volume of the stablecoin traded in exchanges. This could be an indication that holders of Terra USD are shorting the stablecoin to minimize their losses. Coinmarketcap data shows a  24-hour trading volume of $2.97 billion for the stablecoin.

Terra USD (UST) is an algorithmic stablecoin. This is a fancy way of saying that it was minted without being backed by an asset unlike other popular stablecoins. Luna Guard Foundation, the company managing UST has accumulate $3.5 billion in Bitcoin in a bid to back it up with some assets.

Luna Guard Foundation co-founder Do Kwon, said that the objective of the company is to hold up to $10 billion in its forex reserves to back their stablecoin. With the recent UST crisis, Kwon hinted that the company may offload some of its BTC hoard to “rebalance” the “imbalance” in the value of UST.

Reacting to the unpegging of Terra USD, technology maxi, Techronin stated:

“At the moment the biggest threat for the Bitcoin is LUNA. When Luna starts to sell [its] BTC to buy back UST and peg it again it will increase the sell pressure on BTC that will push the whole market down and starts a downward spiral.”

Offloading LGF BTC Holdings

In the quest to repeg UST to the United States dollar, LGF emptied their Bitcoin reserve wallet containing $1.4 billion worth of BTC. The transaction id shows that the coins were sent at 1.20 am UTC on May 10. The transaction has is 0f87e9ab97b8d01ef7e57b28977e74ba3b7878926087a4f23e13635890179be0

Data available from Breadcrumb app shows that the foundation split up the funds into 12,500 and 30,000 bitcoins, with the bigger amount sent to the cryptocurrency exchange, OkEx.


Author: Jinka Kamma

Jinka Kamma is passionate about the prospects of blockchain and the freedom cryptocurrencies afford people across borders. He holds small amounts of bitcoin and tether.