42.5k BTC was reportedly moved from the Luna Foundation Guard wallet as the UST peg crumbled

Fry Electronics TeamMay 10, 2022
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42.5k BTC was reportedly moved from the Luna Foundation Guard wallet as the UST peg crumbled

Around $1.4 billion worth of Bitcoin (BTC) was reportedly moved out of a wallet tied to Luna Foundation Guard (LFG) on Monday, on a day when Bitcoin’s price fell by more than 11% is, raising questions about his ultimate goal.

Data from blockchain explorer Blockchair on Monday revealed that 42,530.82827771 BTC was issued from the LFG wallet, although its destination was unknown. It has been speculated that the funds were split into two batches – around 12,500 BTC and 30,000 BTC respectively – with a portion reportedly being sent to cryptocurrency exchange OKEX.

Around the same time, Twitter account Whale Alert revealed that 12,531 BTC had been transferred from one unknown wallet to another unknown wallet. Whale Alert provides trackers and analytics with reports on large bitcoin transactions.

The move comes less than a day after LFG announced it was taking decisive steps to “proactively defend the stability of the UST bond.” [and] broader Terra economy,” referring to the popular algorithmic stablecoin TerraUSD, which fell below its peg to the US dollar. Actions included lending $750 million worth of BTC to over-the-counter trading firms to protect UST’s peg, and lending $750 million worth of UST to accumulate more bitcoin if it does market conditions begin to stabilise.

UST hit a low of $0.9428 on Monday, according to CoinMarketCap.

UST has lost its peg twice in the past, including the March 2020 COVID-19 liquidity event. Source: CoinMarketCap.

Related: LUNA falls 20% in one day as whale dumps Terra’s UST stablecoin – risk of selloff ahead?

The value of Terra (LUNA) also fell significantly over the weekend, although project co-founder Do Kwon warned that the sell-off was the result of a coordinated attack on the protocol. He also clarified on Sunday that LFG is “not attempting to exit its Bitcoin position” but instead putting capital in the hands of a professional market maker to buy UST if the price falls below the peg and BTC to buy if the price would be higher than or equal to the pen.

On Monday, Kwon also tweeted that he would be “deploying more capital,” though he didn’t specify to what extent.

Extreme market volatility follows LFG’s $1.5 billion Bitcoin acquisition, completed last week via over-the-counter swaps with Genesis Trading and outright purchases from crypto venture fund Three Arrows Capital. At the time, the nonprofit reportedly held around $3.5 billion worth of BTC at an average price of around $37,100 per coin. BTC price bottomed out around $30,300 on Monday, according to data from Cointelegraph Markets Pro and TradingView.

This story will be updated.