LFG Spends $2.8B Protecting UST Peg, Third-Party Investigation Finds

According to a third-party investigation by JS Held, a Jericho, New York-based consultancy company, Luna Foundation Guard (LFG), the organization responsible for the defunct Terra ecosystem, expended $2.8 billion in cryptocurrency in May trying to protect the algorithmic stablecoin TerraUSD (UST) peg. https://twitter.com/LFG_org/status/1592821980772061184 The audit further claims that Terraform Labs (TFL), the company behind the Terra blockchain, spent $613 million in an effort to uphold the peg.

LFG And TFL Activities

The $60 billion ecosystem was destroyed consequently by the activities of LFG and TFL, with UST's value dropping to zero. Due to ecosystem exposure, the crash caused significant contagion throughout the cryptocurrency sector, with multiple lenders, brokers, and exchanges declaring bankruptcy. Terraform Labs founder Do Kwon stated that despite multiple recent crypto failures, it is crucial to differentiate Terra's case, where a transparent, open-source decentralized stablecoin failed to maintain peg parity. Its creators spent proprietary capital attempting to defend it from the failure of centralized custodial platforms whose operators mismanaged other customer funds for financial gain.