The Luna Foundation Guard (LFG), the entity created by Terra Labs to maintain UST pegged to $1 through the creation of a crypto reserve, announced that it spent the majority of its crypto holdings in a – failed – effort to stabilize UST during its recent meltdown.
In a tweet published only hours ago, LFG responded to queries about how the entity’s massive pool of resources was used by disclosing its total assets before and after the collapse of the stablecoin.
As of today, the institution reportedly had the following assets:
- 313 BTC – currently worth around $9.3 million.
- 39,914 BNB – currently worth around $11.8 million.
- 1,973,554 AVAX – currently worth around $64.7 million.
On May 7, LFG reportedly held over 80,000 Bitcoin (BTC) tokens, along with equal amounts of BNB and AVAX. The organization supposedly used its Bitcoin reserves to try to restore UST to its intended peg. However, the selling pressure was too intense at that moment, causing these efforts to fall short.
As of this morning, the value of UST is standing at less than 6 cents on the dollar while the price of LUNA – the token that was supposedly created to maintain UST’s peg – is sitting at $0.0001.
According to the tweet, LFG is looking into the possibility of distributing its remaining reserves among UST holders by prioritizing the smallest holders first.
Proposals made by the founder of Terra Labs, Do Kwon, to restore the value of UST and LUNA to previous levels have not been embraced by the crypto community. One of those proposals involved resetting the number of UST tokens in circulation.
Even if such a reset takes place, the lost credibility will probably keep investors away from both tokens and that would make their recovery unfeasible as crypto assets rely on the public’s willingness to pay something for them due to their lack of tangible value.
In addition, in the absence of reserves, there will be no ammunition that LFG can use to stabilize a new version of UST in case another wave of selling takes place once the fork comes out.
Social Media Gets Heated Amid Real-Life Impact of UST’s Collapse
The effects of this stablecoin collapsing are clear on social media. Comments on various tweets from both LFG and Do Kwon show videos of users who lost money, blaming the development team for the situation.
Meanwhile, the situation appears to be getting heated in South Korea – the country in which Kwon resides – as an unidentified individual reportedly knocked on the door of the apartment where the founder of Terra Labs lives but immediately fled after Kwon’s wife called the police to report the incident.
A user identified as “Chancers” identified himself on AfreecaTV – a P2P live streaming service that operates in the Asian country – and stated that he will be turning himself to the police after losing nearly $1.6 million in the collapse of the stablecoin project.
Reports have circulated lately about a group of investors filing a complaint against Kwon with the South Korean police.
Kwon has voiced his remorse for what happened with UST and LUNA in a tweet sent a few days ago where he stated that, after spending time phone calling members of his team and investors within the community, he felt “heartbroken about the pain” that the project brought to these people.
Other media outlets have reported that Kwon’s wife has solicited special protection from the police amid the doorbell-ringing incident. The police stated that they were planning to review “what additional measures are needed through the investigation”.
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