Terra’s $2 billion Bitcoin reserves: Where did it all go?
The Luna Foundation Guard—the non-profit in charge of Terra's ecosystem's health—kept buying Bitcoin to replenish its holdings just before the UST's debacle. It had over 70,736 BTC (worth over $2 billion) at one time.
Now that the destiny of LUNA-UST has been acknowledged by the space, all eyes are on the organization's unexplained Bitcoin reserve.
Terra founder Do Kwon took to Twitter over the weekend to say that the team was working on recording the utilization of the Luna Foundation Guard's reserves during the de-pegging event. At the same time, he had asked the people to be patient.
4/ We are currently working on documenting the use of the LFG BTC reserves during the depegging event. Please be patient with us as our teams are juggling multiple tasks at the same time.
— Do Kwon 🌕 (@stablekwon) May 13, 2022
Despite this, individuals have already lost their cool and are claiming things like "the lack of comment is the statement."
MOST SHOCKING THING IS WE STILL DONT HAVE ANY STATEMENT FROM DO KWON OR TERRA TEAM ABOUT WHERE DID ALL THE BTC RESERVE GO, EVEN AFTER 4 DAYS OF $LUNA AND $UST CRASH
— Ash WSB (@ashwsbreal) May 15, 2022
Where did the Bitcoins actually go?
The ultimate goal of LFG's BTC acquisition was to help UST maintain its $1 valuation by bolstering its reserves. The purchases, however, were in vain because Terra's stablecoin had lost its value. At the time of publication, UST was trading at $0.1520, much below its $1 price target.
Last week, LFG "loaned" $750 million in Bitcoin to over-the-counter trading firms and market makers from its overall reserves "to assist safeguard the UST peg."
According to basic math, the organization should have had at least $1.2 billion in Bitcoin reserves after receiving the loan. Nonetheless, according to figures, the balance was zero last week.
Such a surreal chart pic.twitter.com/sOIOTFxJrY
— Will Clemente (@WClementeIII) May 11, 2022
At press time, the Foundation's publicly visible wallet address showed a 0 Bitcoin balance, confirming the same.
Source: Blockchain.com
Despite the fact that it is still unclear where LFG's Bitcoins have gone, the most popular speculative idea claims that the Foundation has given up all of its BTC.
Elliptic, a blockchain analytics company, utilized its algorithms to track the money flow and figure out what happened to the LFG Bitcoins.
A Bitcoin address associated with LFG transmitted 22,189 BTC (worth $750 million at the time) to a new address around the time of the $750 million loan announcement. Following that, in the evening, another 30,000 BTC (worth $930 million at the time) was transmitted to the same address from other LFG wallets.
Then, according to Elliptic,
"Within hours, the full 52,189 BTC was transferred to a single account at Gemini, a US-based cryptocurrency exchange."
LFG should have left 28,205 BTC in its reserves after the Gemini transfer. Coincidentally,
"This was moved in its entirety, in a single transaction, to an account at the cryptocurrency exchange Binance at 1 AM UTC on May 10th."
However, the analytical engine was unable to determine if the claimed Bitcoins were sold or transferred to other wallets after the transfer.
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