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May 6, 2022 by Aishwarya shashikumar
The Luna Foundation Guard (LFG), a non-profit dedicated to the Terra environment, said on Thursday that it has purchased $1.5 billion in bitcoin (BTC) for its stablecoin reserves.
LFG announced that it had purchased 37,863 bitcoins ($1.5 billion) through over-the-counter swaps with Genesis Trading and Three Arrows Capital. One billion dollars came from an OTC swap with Genesis, while the remaining $500 million came from Three Arrows Capital.
With Thursday’s statement, Luna Foundation Guard’s bitcoin reserves have increased to $3.5 billion, putting it 30 percent closer to its declared objective of $10 billion. According to statistics from BitInfoChart’s “Bitcoin Rich List,” LFG’s wallet became the seventh-largest single BTC holder as a result of the acquisition.
The LFG is acquiring bitcoin as part of its efforts to build up reserves for the TerraUSD (UST) stablecoin. Do Kwon, the CEO of Terraform Labs, has donated cash to help the charity complete its bulk BTC acquisitions.
Luna Foundation Guard’s investment in AVAX tokens
The LFG had also purchased $100 million in avalanche (AVAX) tokens for its stablecoin reserves, in addition to bitcoin. LFG had purchased $231 million in bitcoin the day before to increase its UST reserves, but this appears to be the first time the company has purchased another cryptocurrency. LFG is currently a substantial market buyer of AVAX, despite its market share being significantly lower than bitcoin’s.
LGF took to Twitter to say,
“Welcoming $AVAX as the second major layer one crypto asset next to $BTC as part of the $UST Reserve. The inclusion of @avalancheavax’s native token marks the start of a diverse pool of layer one crypto assets helping support the $UST peg.”
Stablecoins are digital currencies whose market value is tied to a more stable asset. The Luna Foundation Guard is getting closer to its goal of amassing $10 billion in bitcoin to support the United States Terra stablecoin, or UST.
The LFG’s move is part of a growing trend of algorithmic stablecoins collecting crypto assets as collateral. The USDD stablecoin from Tron is also due to launch, with plans for a $10 billion collateral reserve.