December 4, 2022

The LFG Makes A Shocking Revelation

Only 313 BTC Is Left In LFG’s Btc Reserves

On Monday, the LFG revealed that it only has 313 BTC in its reserves via a Twitter thread. The tweet also indicated the remaining amounts of altcoins left in its crypto reserve. The altcoins that the LFG listed in the tweet are BNB, AVAX, UST, and LUNA.

The LFG revealed that its BTC reserves were 80,394 as of May 7, before the second to the last tweet thread revealed that the BTC reserve left is now 313 BTC. The LFG’s BTC reserves are currently worth about $9.3m, sharply contrasting its BTC worth of $3B as of May 7.

Terra’s algorithmic stablecoin (UST) collapsed last week along with the network’s governance token (LUNA) despite the rescue efforts of the LFG, which resulted in the wipe off of 80k BTC from its reserve. The dollar-pegged UST didn’t just lose its peg; it declined significantly and currently trades at $0.114 and has now been officially de-pegged from the USD. 

Terra’s native token, LUNA, also went on a freefall, moving from $80 to $0.0002, according to current Coinmarketcap data. The LFG claimed that it was purchasing more cryptos to bolster its crypto reserve. If a de-pegging of the UST should occur, it can have more funds to help UST reclaim its USD peg.

Hence, when the UST lost its USD peg last week Monday, the LFG stated that it would deploy $750M in BTC and $750M in other cryptos to help UST reclaim its USD peg. The LFG claims that an ‘expert market maker’ would help trade with the BTC funds and generate profits, which the LFG would use to acquire more BTC and shore up its reserves.

A Failed Rescue Mission

On-chain analytics platform, Elliptic, confirmed LFG’s claims and added that the LFG also sent an additional $935M worth of BTC to the market maker. Later, the LFG moved over 52K BTC (valued at more than $1.6B) to a wallet address with Gemini crypto exchange. However, the LFG only confirmed that BTC transferred to a crypto wallet with Gemini in one of its tweets earlier today.

The LFG further claimed that terraform labs (developers of the Terra blockchain) sold 33,206 BTC on May 10 to re-purchase 1,164,081,521 UST in a desperate effort to prevent the UST from collapsing entirely as it was trading for less than $0.07 at that time.

Despite all these efforts, UST still crashed, and LFG’s tweet thread caused a further decline of the UST stablecoin as it lost 32.75% of its value following that Twitter thread. LFG has stated that it is considering a compensation package for the remaining UST holders, with holders of the smallest UST holdings receiving their compensation before other holders. However, LFG has yet to come out with a detailed distribution plan.