Luna Foundation Guard has made an unsuccessful attempt to maintain the terraUSD (UST) stablecoin peg. To do this, they paid millions of dollars in cryptocurrency and almost depleted the fund’s reserves. Of the 80,000 Bitcoins, only 313 remain in their possession.
The rest of the assets, mainly in emergency tokens UST and LUNA, the fund is going to spend on compensation to investors. We remind that last week the $40 million Terra ecosystem collapsed. Stablecoin terraUSD, which was supposed to cost $1, fell to 20 cents – and the LUNA token, which was supposed to be a “shock absorber” for binding terraUSD, fell from $80 to 0 cents.
On May 8, Luna Foundation Guard transferred more than 50,000 Bitcoins “for counterparty trading” when the UST price was just beginning to fall. On May 12, another 30,000 Bitcoins from the reserve were sold to Terraform Labs “in a last attempt to protect the peg.”
These maneuvers did not help, as traders continued to sell the token for other stablecoins, which led to an outflow of capital from the UST and thus lower prices. Luna Foundation Guard’s reserves are almost exhausted in an attempt to protect the stablecoin. They now have about $80 million in other cryptocurrencies. That’s a tiny fraction of $10 billion earlier this month.
Luna Foundation Guard is now accused of not managing the reserve funds, which were supposed to belong to the decentralized Terra community, in a lack of transparency. Blockchain leaders are urging the fund to pay compensation to smaller UST and LUNA owners before paying larger investors.