The $1.5 billion worth of BTC purchase was made by the Luna Foundation Guard to bolster its stablecoin reserves.
Luna Holds Over 80K BTCs
The latest BTC purchase brings Luna Foundation Guard’s (LFG) total holdings to more than 80,000 BTCs, which is worth nearly $3.5 billion, making the UST Forex Reserve one of the top 10 bitcoin holders in the world. The purchase was conducted in two steps. In the first step, the LFG swapped $1 billion worth of UST for BTC worth the same amount with crypto prime broker Genesis. In the next step, it bought an additional $500 million worth of BTC from crypto hedge fund Three Arrows Capital.
The ultimate goal of the LFG is to accumulate a total of $10 billion worth of Bitcoin to back its most popular stablecoin, the U.S. Terra (UST). According to the co-founder and CEO of Terraform Labs, the company behind the development of the Terra blockchain, that goal could be achieved by the end of the Q3 of 2022.
Reinforcing UST Reserve
Stablecoins are cryptos whose values are pegged to a more stable currency. For example, the value of the Terra stablecoin is directly pegged to that of the US dollar. Therefore, by collecting more BTCs, the team is hoping to bolster the reserves of the UST. The Terra reserve also holds around $100 million worth of Avalanche (AVAX) cryptocurrency.
Co-founder and CEO of Terraform Labs, Do Kwon commented,
“For the first time, you’re starting to see a pegged currency that is attempting to observe the bitcoin standard. It’s making a strong directional bet that keeping a lot of those foreign reserves in the form of a digital native currency is going to be a winning recipe…I think it is symbolic in the sense now that we live in a time where there’s excess money printing across the board and when monetary policies highly politicized that there are citizens that are self-organizing to try to bring systems back to a sounder paradigm of money.”
Luna’s BTC Shopping Spree
The LFG has been on a fundraising and BTC shopping spree for a while now. Prior to its latest bitcoin purchase, the company had bought $173 million in Bitcoin in April 2022 through a series of transactions. Earlier, in February 2022, LFG had also announced that it had successfully raised $1 billion from an over-the-counter sale of LUNA, which is the native token of the Terra blockchain. This $1 billion was earmarked for cushioning the UST stablecoin in the case of a market sell-off.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Credit: Source link
