Location of Terra’s Bitcoin Reserve Unknown Following Transfers

Billions in bitcoin, bought as a reserve by the Luna Foundation Guard (LFG), a foundation set up by the failed Terra blockchain, is now untraceable after being moved to two crypto platforms, Bloomberg wrote Saturday (May 14).

LFG reportedly bought $3.5 billion of bitcoin between January and March this year, according to data from blockchain forensics firm Elliptic.

That may raise questions if investors seek out compensation after the collapse of the blockchain. On May 9, the value of the Terraform TerraUSD token plummeted, and the foundation said it would use the bitcoin from the reserve to buy UST and maintain the one-to-one peg with the dollar.

Then, the crypto wallets were emptied over the next day, the report said. Around $1.7 billion was sent from LFG wallets to a new address on May 9 in two transactions.

The report noted that it took a few hours for the whole amount to be moved to a lone account on the Gemini crypto exchange with several transactions. Elliptic said that after that, it was impossible to trace the assets.

The rest of the assets were moved on May 10, in a single transaction to a Binance exchange account. Elliptic said it couldn’t identify whether the assets were sold or moved to other wallets at that point.

PYMNTS wrote that the TerraUSD collapse could also have a detrimental effect on the decentralized finance (DeFi) industry, which has numerous staking and lending platforms connected.

Read more: Spooked by Stablecoin’s Collapse, Investors Flee DeFi

The report noted that the total capitalization of the TerraUSD coin fell from $1.8 trillion to $1.3 trillion — which also came with an erasure of bitcoin’s gains from 2021. Both the market and bitcoin have been recovering, but DeFi lending might be seeing some more damage, and the report said it’s unclear when recovery will come.

The report noted that DeFi is measured in total value locked (TVL), referring to the value of the various coins locked into lending and staking pools, which can be borrowed or used as automated market maker pools on decentralized exchanges.