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Luna Foundation Guard acquires $1.5B in Bitcoin

Updated: Aug 31, 2024
Published: May 5, 2022
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Luna Foundation Guard (LFG) has purchased 37,863 BTC as it moves closer to amassing $10 billion in stablecoin reserves by the end of Q3.

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Luna Foundation Guard buys $1.5B in Bitcoin.

According to the firm, the deal involved a $1 billion over-the-counter swap with Genesis for $1 billion in UST and a $500 million BTC purchase from Three Arrows Capital. At the time of writing, LFG's total bitcoin holdings were at 80,394 BTC, amounting to about $3.5 billion. It also has a large amount of AVAX, the native token of Avalanche, worth more than $100 million.

“For the first time, you’re starting to see a pegged currency attempting to observe the Bitcoin standard,” said Do Kwon, co-founder, and CEO of Terraform Labs. “It’s making a strong directional bet that keeping a lot of those foreign reserves in the form of a digital native currency will be a winning recipe.”

Why is Terra buying Bitcoin?

Do Kwon revealed in March that Terra intended to purchase more than $10 billion in bitcoin to serve as reserves for its stablecoin UST. He explained that the funds in the Bitcoin reserves would be used to backstop short-term UST redemptions and a decentralized FX reserve.

In addition to Bitcoin, Kwon is backing UST with native tokens of Layer 1 blockchains, as seen by the acquisition of $100 million AVAX, the native token of Avalanche, as he thinks by introducing new forms of collateral, the reserve will expand Terra stable coins' potential user base.

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