Why Luna is Buying $500 Million Worth of Bitcoin for Its Stablecoin

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Luna Foundation Guard (LFG) has bought over 11,700 BTC worth roughly $520 million so far this week to build a bitcoin reserve to support its stablecoin, TerraUSD (UST). While many in the Bitcoin community were quick to point out that the project is fundamentally different than those built upon on-chain bitcoin, such a significant purchase of BTC had undeniable impact on the Bitcoin ecosystem and, quite possibly, the price.

LFG is a non-profit organization based in Singapore that works to cultivate demand for Terra’s stablecoins and “buttress the stability of the UST peg and foster the growth of the Terra ecosystem.”

Terraform Labs, on the other hand, is a tech startup behind the development of Terra. The firm is currently in a legal battle with the U.S. Securities and Exchange Commission (SEC) as the watchdog alleges that Terraform Labs violated U.S. securities laws with its Mirror Protocol.

Bitcoin Magazine found LFG’s Bitcoin address after rumors online pointed at a $125 million deposit of USDT into Binance. From analyzing Binance’s Bitcoin hot withdrawal wallet, an address was spotted receiving roughly the same amount, in BTC, within a one-hour window. Terraform Labs founder Do Kwon on Wednesday confirmed via email that the address indeed belongs to LFG. As of March 25, LFG has deposited 11,759 BTC to that address over the past few days.



Source link Bitcoin Magazine

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