Since December 2020, bitcoin has fallen below $ 26,000. (Photo credit should be read by CFOTO / Future Publishing via Getty Images)

CFOTO | Future publication via Getty Images

Investors wanted to know what happened to the more than $ 3 billion bitcoins acquired by crypto-firm Terra to support its failed stablecoin. Now they have received their answer.

Luna Foundation Guard, a foundation created by Terra Do Kwon, said Monday he spent almost all of his bitcoin in his reserve last week in a futile attempt to save terraUSD – or UST, in short.

In total, the fund has amassed more than 80,000 bitcoins, valued at more than $ 3 billion last week. Kwon has promised to use bitcoin in the event of a sharp drop in the value of the UST.

In a series of tweets, the Luna Foundation Guard said it had converted 52,189 bitcoins to “counterparty trading” as the UST fell below its estimated peg to $ 1. Another 33,206 bitcoins were sold to Terra directly in a recent attempt to protect the peg, the fund said.

As of Monday, the Luna Foundation Guard has only 313 bitcoins left, worth about $ 9.3 million. The firm said it would use the rest of its assets, which include some other digital tokens such as BNB and Avalanche, to “compensate other UST users”.

“We are still discussing various dissemination methods, updates that will appear soon,” said a Luna Foundation security guard.

UST is what is known as an “algorithmic” stablecoin. Unlike tether and USDC, which hold fiat assets in reserve to secure their tokens, UST relied on a complex mix of code combined with a floating token called luna to balance supply and demand and stabilize price.

When the UST began to fall below $ 1 last week, the luna also began a sell-off, leading to a vicious circle that forced the UST to fall to less than $ 30, and the luna became insignificant. According to CoinGecko, the UST now costs just 9 cents.

The collapse of Terra tokens hit the crypto market, destroying more than $ 200 billion in wealth in one day. On Thursday, bitcoin fell briefly. Bitcoin has fallen below $ 26,000, the lowest level since December 2020.

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