At the end of last week, the UST stablecoin Terra showed the first warning sign of instability, as it slipped from its $1 peg and dropped to $0.985.

The Luna Foundation Guard (LFG), the non-profit organization responsible for overseeing the health of the Terra ecosystem, has voted to deploy $1.5 billion worth of bitcoin and the UST with the goal of re-pegging the UST to the dollar.

This step was the implementation of a rescue strategy in case things got worse.

Since January, LFG has hoarded more than $3.5 billion in bitcoin reserves, Avalanche, LUNA, and UST, to publish if UST’s capacity drops below $1.

According to LFG, this loan capital will be used to purchase huge amounts of UST, which will create buying pressure that will push the stablecoin to its intended price.

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But hours after the loan, last Monday the digital stablecoin UST started to fall and has continued to do so.

By Tuesday, with UST’s price plunging to record lows, LFG’s reserves were nearly all empty.

At the end of the week, the price of UST crashed to $0.13, destroying the digital currency LUNA in the process and wiping out $40 billion in value.

Currently asked question:

What exactly happened to Terra’s estimated $3.5 billion reserves? And where did you go?

According to blockchain analytics platform Elliptic, hours after LFG announced a $1.5 billion loan, a bitcoin address linked to LFG sent nearly $750 million worth of bitcoin to a new address.

On the same day, an additional $930 million in bitcoin was sent from multiple wallets linked to LFG to the same new address.

That total of 52,189 bitcoins, worth over $1.6 billion, was then moved from the new address to a single Gemini account.

Then, early Tuesday morning, the entire amount was transferred to a Binance account.

While it is not known, whether bitcoins were sold in Gemini and Binance accounts to buy huge amounts of UST.

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It is not possible to track whether these massive amounts of bitcoin were sold, or transferred, or any number of other wallets still under the control of LFG.

What’s even more shocking is that we still don’t have any word from the Kwon or Terra team about where all the bitcoin reserves have gone, even 4 days after Luna dollar And the UST Collide

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– Ash WSB (@ashwsbreal) May 15 2022

In the wake of the disaster brought on by the collapse of UST and LUNA, many began to openly question the transparency of the Terra co-founder’s actions last week.

As of the time of writing this article, UST is trading at $0.12 and is functionally worthless.

While Bitcoin bounced back to a price close to $30,000.

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