Report: DOJ and FBI Investigating Terraform Labs in Connection to Algorithmic Stablecoin Collapse

March 14, 2023 Bitcoin.com

Terraform Labs and CEO Do Kwon Charged by SEC With Multibillion-Dollar Crypto Fraud

February 16, 2023 Bitcoin.com

LFG to deploy $1.5 billion to bolster UST peg and build BTC reserves

May 9, 2022 Coin Telegraph

LFG to deploy .5 billion to bolster UST peg and build BTC reserves

Bitcoin

LFG outlined that it will first loan out $750 million worth of BTC to over-the-counter trading firms to manage the capital and “help protect” UST.

Amid the sharp pullback across Bitcoin (BTC) and the wider crypto market this week, the Luna Foundation Guard (LFG) is set to deploy $1.5 billion worth of capital to “help protect” Terra USD’s peg to the U.S. dollar.

The Singapore-based nonprofit LFG is part of the Terra (LUNA) ecosystem and is tasked with collateralizing the network’s algorithmic stablecoin UST to keep its USD peg intact, while also managing the network’s reserves.

While details are sparse at this stage, the LFG outlined on Twitter earlier today that it will first loan out $750 million worth of BTC to over-the-counter (OTC) trading firms to manage and trade the capital.

Following on from this, once the market has stabilized, the LFG will obtain a 750 million UST loan — most likely from Terraform Labs — to re-balance its reserves.

The LFG noted that the council voted to execute the plan after observing “significant” market volatility across BTC, UST and LUNA over the past several days.

4/ As a result, the LFG Council has voted to execute the following:

- Loan $750M worth of BTC to OTC trading firms to help protect the UST peg.

- Loan 750M UST to accumulate BTC as market conditions normalize.
— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022

Providing further explanation on the move, Terraform Labs founder Do Kwon emphasized on Twitter that “LFG is not trying to exit its Bitcoin position” and is ultimately deploying the capital in the short term to strengthen UST in the short term will upping its BTC holdings long term.

“While buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market. As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.”

1/ The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how: https://t.co/TfaAPkzgUJ
— Do Kwon (@stablekwon) May 9, 2022

As the LFG’s $2.91 billion reserves are primarily backed by BTC (91% or $2.7 billion) the declining price of assets is forcing the entity to readjust its balance sheet to maintain UST’s peg. At the time of writing, BTC is down 12.7% over the past seven days to sit at roughly $33,600, while UST is slightly off its peg at $0.99.

Terra’s native asset LUNA, which also plays a part in maintaining UST’s peg via its burning and minting mechanism, has suffered significantly over the past week as well, dropping a hefty 24.5% to sit at $62.15.

Terra’s UST flips BUSD to become third-largest stablecoin

April 18, 2022 Coin Telegraph

Coin Telegraph

UST market cap has surged to flip BUSD, however, its trading volumes are still only around one-fifth worth of the Binance digital dollar.

The Terra (LUNA) blockchain’s algorithmic stablecoin Terra USD (UST) has flipped Binance USD (BUSD) to become the third-largest stablecoin on the market.

UST is a USD-pegged stablecoin that was launched in September 2020. Its minting mechanism requires a user to burn a reserve asset such as LUNA to mint an equivalent amount of UST.

According to Coingecko, UST’s total market capitalization has surged 15% over the past 30 days to sit at roughly $17.5 billion at the time of writing. The figure currently places UST as the third-largest stablecoin after it flipped BUSD with a slightly lower market cap of $17.46 billion.

The asset now trailing only behind industry giants Tether (USDT) at $82.8 billion, and USD Coin (USDC) at $50 billion, however, the gap is quite substantial at this stage.

The data also shows that UST has been on a meteoric pump since mid-November, with the market cap increasing by 525% since then.

Despite flipping BUSD in terms of market cap, UST is trading in volumes well below its immediate competitor, with Binance’s stablecoin seeing $2.26 billion worth of trading volume over the past 24 hours compared to UST’s $431.79 million.

According to CoinGecko, the market value of Terra's stablecoin UST reached $17.5 billion on April 18, surpassing BUSD's $17.4 billion, becoming the third-largest stablecoin after USDT and USDC. But UST’s trading volume is very low, only 1/5 of BUSD.
— Wu Blockchain (@WuBlockchain) April 18, 2022

Terra has been grabbing the headlines of late, due in part to co-founder Do Kwon who recently vowed that the project will accrue a whopping $10 billion worth of Bitcoin (BTC) to back its UST reserves.

Much like the wider crypto market of late, however, bullish announcements are doing little to push the price of LUNA upwards. The token’s price is down 12.4% over the past 30 days to sit at $77.31, while it is also down 34.4% since its brief all-time high of $119.18 on April 5.

‘We’re already buying’: Terra founder plans to obtain $10B BTC for reserves

March 17, 2022 Coin Telegraph

‘We’re already buying’: Terra founder plans to obtain B BTC for reserves

BTC Reserves

Kwon also bullishly emphasized that its stablecoin TerraUSD (UST) backed by $10 billion-plus in BTC reserves will “open a new monetary era of the Bitcoin standard.”

The founder of Terraform Labs (TFL) and Ethereum competitor Terra (LUNA) Do Kwon has outlined plans to accumulate a whopping $10 billion worth of Bitcoin (BTC) to add to the project’s stablecoin reserves.

Terra is a decentralized blockchain platform that specializes in stablecoin minting. Its Terra USD (UST) is an algorithmic stablecoin pegged to the value of the U.S. dollar, with the USD value partly maintained via an equivalent amount of its native token LUNA.

Specific details are sparse at this stage, however Kwon noted via Twitter on March 14 that Terra will not sell its native asset LUNA to build its reserves, and that more information is coming soon.

Kwon also bullishly emphasized that its stablecoin TerraUSD (UST) backed by $10 billion plus in BTC reserves will “open a new monetary era of the Bitcoin standard.”

“P2P electronic cash that is easier to spend and more attractive to hold” he added.

$UST with $10B+ in $BTC reserves will open a new monetary era of the Bitcoin standard.

P2P electronic cash that is easier to spend and more attractive to hold #btc
— Do Kwon (@stablekwon) March 14, 2022

Cointelegraph reached out to Kwon to see if the plans were already in motion, or it was just an idea being floated at this stage, and the founder simply responded:

“I don’t understand the distinction, We’re already buying Bitcoin.”

When users on Twitter asked Kwon what the BTC reserves will be used for, he responded that the funds will be used to backstop short-term UST redemptions and for a decentralized forex reserve.

In a tweet shortly after, Kwon also noted that: “We start buying BTC and Twitter verifies me, I see you Jack,” in a nod to Jack Dorsey, who is a Bitcoin bull and former CEO of Twitter.

This is the second time this month Kwon has outlined plans to fortify the reserves backing Terra’s stablecoin.

After TFL donated 12 million LUNA to the Luna Foundation Guard LFG on Friday (worth around $1 billion at current prices) to support growth of the Terra ecosystem and the sustainability of its stablecoins, Kwon outlined that the project will keep “growing reserves until it becomes mathematically impossible for idiots to claim de-peg risk for UST.”

According to data from Coingecko, the marketcap of UST currently sits at $15.12 billion.