In an audit report, LUNA Foundation Guard (LFG) says it spent $2.8 billion in bitcoin and stablecoin to defend the TerraUSD ($UST) stablecoin peg during the May 2022 collapse.
LFG was created in January 2022 with protecting the $UST peg being one of its main goals. As such, it kept accumulating bitcoin, stablecoins and other cryptocurrencies to defend UST’s peg to the U.S. dollar.
According to the audit report by global consulting firm, JS Held, LFG spent 80, 081 Bitcoins ($BTC) and $49.8 million in stablecoins, amounting to $2.8 billion in total, to defend the UST peg.
One of the Terra stablecoins, $UST, lost its parity with the U.S. dollar in May 2022, triggering a system-wide collapse of the Terra ecosystem, including its native token, $LUNA.
“The report shows that all LFG funds were spent to defend UST’s peg parity with the Dollar as declared and that LFG’s remaining balances are the only funds remaining,” the audit report stated.
Below are LFG balances between May 7 and May 16 2022. (Image: JS Held audit of LFG’s books)
| Holding Name | Beginning Balance | Ending Balance |
| BTC | 80,394 | 313 |
| BNB | 39,914 | 39,914 |
| USDT | 26,281,671 | 0 |
| USDC | 23,555,590 | 0 |
| AVAX | 1,973,554 | 1,973,554 |
| UST | 697,344 | 1,847,079,725 |
| LUNA | 1,691,261 | 222,713,007 |
Apart from LFG’s efforts, the report also stated that Terraform Labs, headed by Do Kwon, also tried to defend the UST peg. Terraform Labs reportedly spent $613 million of its own funds to defend the UST peg.
LUNA Net Purchases by TFLMay 8-12, 2022
Meanwhile, Terra Co-Founder, Kwon Do-Hyung, has sought to delineate FTX’s collapses from Terra’s own collapse.
“While there have been multiple recent failures in crypto, it is important to distinguish between Terra’s case, where a transparent, open-source decentralized stablecoin failed to maintain peg parity and its creators spent proprietary capital to try to defend it, and the failure of centralized custodial platforms where its operators misused other people’s money (customer funds) for financial gain,” said Kwon.
With the audit published, attention could now shift towards compensation efforts for users affected by the Terra ecosystem collapse.
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