Where did Luna Foundation’s $3.5bn reserves in BTC go?

By Raffaele Redi

The Luna Foundation Guard’s reserves amounted to $91m as of 16 May

Stack of TerraUSD (UST) stablecoins in front of a black background                                 
The Luna Foundation Guard has published a report detailing its current reserves – Photo: Shutterstock

TerraUSD (UST) investors and cyber-security firms are hunting for $3.5bn in bitcoins (BTCs) that the Luna Foundation Guard says it has sold or exchanged in a failed attempt to repeg the algorithmic stablecoin UST.

Cyber-security firm Elliptic, which has published an analysis of the cryptocurrency’s movements, has found funds were transferred to accounts on the crypto exchanges Gemini and Binance – but it is “not possible to identify whether the assets were sold or subsequently moved to other wallets”.

“Those seeking to recoup losses suffered through their exposure to UST may be interested to determine whether these bitcoins remain held on these exchanges,” concluded Elliptic analysts on Friday 13 May 2022.

The current reserves

On Monday 16 May, the Luna Foundation Guard tweeted a report on its current reserves, saying it sold most of the reserves to purchase USTs in an attempt to save the stablecoin from a death spiral.

According to the foundation’s reserves dashboard as of 16 May, its reserves amount to $91m in cryptos – mostly UST and Avax (the native token of the Avalanche blockchain), Binance Coin stablecoins (BNB) and bitcoins (BTCs) – amounting to exactly BTC313 ($9.3m).

At the time of wriitng, no details have been shared yet on the allocation of the funds. However, the foundation has tweeted: “The foundation is looking to use its remaining assets to compensate remaining users of $UST, smallest holders first. We are still debating through various distribution methods, updates to follow soon.”

The $3.5bn in BTCs transferred

In its analysis, Elliptic said it is not possible to trace the ultimate destination of 80,394 BTC held on 7 May 2022 by the foundation.

Elliptic said: “52,189 BTC was moved to a single account at Gemini – the US-based cryptocurrency exchange – across several bitcoin transactions. It is not possible to trace the assets further or identify whether they were sold to support the UST price.

“This left 28,205 BTC in Terra’s reserves. At 1:00 am UTC on 10 May, this was moved in its entirety, in a single transaction, to an account at the cryptoasset exchange Binance. Again, it is not possible to identify whether these assets were sold or subsequently moved to other wallets.”

Further reading

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