The whole crypto space was under a catastrophic drop after the Terra (LUNA) token bottomed 99% in just two days where the Blockchain’s stablecoin UST depegged leading to the crypto crash.
LUNA was created by Terraform Labs with algorithmic stablecoin TerraUSD (UST) in order to maintain its $1 peg. However, the blockchain’s UST stablecoin bottomed from $1 to $0.15 between May 9 and May 14.
Today, on May 16, the LUNA Foundation Guard (LFG) revealed that it has sold a significant amount of tokens from its reserve. The foundation has sold 80,082 from its Bitcoin reserves for UST between May 8 and 10.
This non-profit organisation has a reserve of 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. The LFG started converting its reserves to UST on May 8 after executing the on-chain swaps directly and then transferring Bitcoins to other counterparties so that they can enter the trading in large size.
There was a selling of 26,281,671 USDT and 23,555,590 USDC for an approximately 50,200,071 UST.
Retail Users To Be Reimbursed First?
The foundation looks forwards to utilizing the remaining assets for reimbursement for its other users of UST, starting with the one who has the lowest amount.
It’s important to see that in just a week, LFG’s reserve has dropped from $3.1 billion to $87 million. This data suggests that approximately $3 billion maintain the UST peg, but still, the stablecoin couldn’t maintain its peg.
On the other hand, this de-pegging of UST has also affected the Binance CEO Changpang Zhao has also been affected. Binance, one of the largest crypto exchanges received 15,000,000 LUNA as part of the exchange’s initial $3 million investment. However, still, CZ asked LFG to compensate retail users for their loss before any other institutions are reimbursed.
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Source: https://coinpedia.org/news/amidst-terras-drastic-crash-the-lfg-sold-80082-from-its-btc-reserves/