LFG and TFL’s Financial Rescue Mission
Between May 8 and May 12, 2022, the Luna Foundation Guard (LFG) and Terraform Labs (TFL) embarked on a quest akin to financial superheroes trying to save their trusty sidekick, TerraUSD (UST), later rebranded as TerraUSD Classic (USTC). Their efforts were scrutinized by a technical audit, aiming to address some rather spicy allegations swirling around on social media regarding the management of funds used to defend the UST dollar peg.
The Numbers Game
According to the audit by JS Held, a U.S. consulting firm, LFG emptied its treasure chest to the tune of 80,081 Bitcoin (BTC) and approximately $49.8 million in stablecoins, which was around $2.8 billion at that moment. In addition, TFL threw in its fair share, spending an additional $613 million to sustain the peg. It was as if they were at a financial casino, but instead of poker chips, they were betting on a decentralized stablecoin.
Clearing the Air on Allegations
After the audit results were made public, LFG proclaimed victory, emphasizing no funds mismanagement occurred. They quipped about allegations of frozen funds being nothing more than ice cubes in the sun, stating:
“All LFG funds are kept in self-hosted wallets, have not moved since the May 16th tweet, and have not been frozen.”
The Ironic Twist
However, plot twist: despite the audit’s claims, South Korean authorities were not just sitting idly by. Just a week later, they called for exchanges to freeze LFG-related funds. September brought further complications as authorities demanded that exchanges like KuCoin and OKX freeze a hearty 3,313 BTC that had been transferred from a wallet created under LFG’s name.
The Criminal Charges Fog
The story thickens with Terraform Labs’ founder, Do Kwon, currently facing substantial criminal charges in South Korea while simultaneously playing the game of hide and seek. He was quoted reflecting on the need to differentiate failures in decentralized systems versus those in centralized custodial platforms, essentially throwing some serious shade at others who misused customer funds:
“It is important to distinguish between Terra’s case… and failure of centralized custodial platforms where its operators misused other people’s money (customer funds) for financial gain.”
A Heartfelt Apology
As the saga unfolded, Kwon dropped a heartfelt note, addressing the unfortunate souls who lost their hard-earned cash in UST. He stated:
“Many of you lost a lot of money in UST – for this I am sorry. While the system was transparent and open source, I as its creator should have understood and communicated its risks better.”
It seems Kwon is really feeling the weight of responsibility, even as his whereabouts are currently on par with a magician’s vanishing act. This saga is a stark reminder of the wild world of cryptocurrency where things can go from heroics to chaos in the blink of an eye.
