Terra Luna Foundation Guard Halts $100M Compensation Distribution

Written by C, Fiona

Last updated: 2022-10-09

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Terra Luna Foundation Guard (LFG), a non-profit organization supporting the Terra ecosystem, has halted plans to distribute $100 million from its reserve among small UST holders citing litigation issues.

The organization announced the news in a Friday tweet, noting that they are freezing the distribution of LFG’s assets due to the threat of litigation. The LFG said they currently don’t have a specific date for when they might resume the distribution again.

“Our goal is to distribute LFG’s remaining assets to those impacted by the depeg, smallest holders first,” LFG tweeted. “Unfortunately, due to ongoing and threatened litigation, distribution is not possible at this time. While these matters are outstanding, there can be no timeline established for resolution.”

The foundation claimed that they are still determined to distribute LFG’s remaining assets among UST holders, starting with small ones.

Following the unprecedented collapse of Terra’s algorithmic stablecoin, which wiped out around $60 billion from the crypto market, the LFG published a detailed report on how it spent its reserves to defend the UST peg. The foundation said that it will use the remaining assets, worth around $100 million, to compensate remaining UST holders.

In contradiction to LFG, Do Kwon says funds not frozen

Terra founder Do Kwon has recently made comments that contradict the LFG’s claims. On Thursday, he said that his assets have not been frozen after reports alleging that South Korean prosecutors have frozen ₩56.2 billion ($39.9 million) in cryptoassets belonging to Kwon started circulating.

“Once again, I don’t even use Kucoin and OkEx, have no time to trade, no funds have been frozen,” he said in response to a tweet by CoinDesk that claimed prosecutors in South Korea have frozen around $40 million of Kwon’s funds. “I don’t know whose funds they’ve frozen, but good for them, hope they use it for good.”

A report by South Korean local media outlet News1 wrote on Wednesday that the LFG created a wallet holding some 3,313 BTC on the crypto exchange Binance one day after the arrest warrant for Kwon was issued. As per the report, some $27.6 million worth of BTC was then transferred from Binance to KuCoin and about 56.2 billion won to the OKX exchange in the following three days.

Kwon has gone head to head with South Korean regulators and various authorities In late September, the Seoul Southern District Prosecutor’s Office’s Financial and Securities Crime Unit confirmed that Interpol had issued a Red Notice – a high-level request for global police officers to “locate and provisionally arrest” Kwon “pending extradition, surrender, or similar legal action,” as reported.

Terra LUNA and LUNC price

Meanwhile, Terra LUNA has failed to gain momentum since its launch more than four months ago. The coin is currently trading at about $2.50, down 87% from its all-time high of around $20.

Luna Classic (LUNC), on the other hand, has gained more than 28,000% since hitting an all-time low on May 13.