The Luna Foundation Guard (LFG), the official stewards of Terra's bitcoin reserves, released a statement Monday documenting how they scattered millions of dollars worth of cryptocurrencies in their failed attempt to maintain the terraUSD (UST) stablecoin peg.
In one of the most catastrophic events in cryptocurrency history, terra's $40 billion ecosystem collapsed last week when the UST stablecoin - which was supposed to be worth $1 - fell below 20 cents. The LUNA token, which is supposed to serve as a kind of shock absorber for UST's "algorithmic" dollar-pegging mechanism, crashed from $80 to under $0.002.
In a tweet on Monday, LFG said it sold most of the BTC in its reserves for UST when Terra's ecosystem threatened to collapse early last week.
LFG said it transferred more than 50,000 BTC "for trading with a counterparty" on May 8 when the UST price began to fall.
The funds were used to "directly execute on-chain swaps and transfer $BTC to a counterparty so that it can trade with the foundation on a large scale and at short notice."
On May 12, LFG said another 30,000 BTC from its reserves were sold by Terraform Labs (TFL), the original company behind Terra, "in a last-ditch effort to defend the peg."
LFG confirmed that the remainder of its reserves, which once totaled more than $3 billion, have all but sunk as a result of unsuccessful efforts to defend UST.
According to LFG, those funds will be used to "compensate the remaining users of the UST, first and foremost the micro-owners."
LFG's statement Monday comes amid criticism that Terra's reserve funds - which are supposed to belong to the "decentralized" Terra community - have been handled with a lack of transparency by Terra's centralized leaders and investors.
This also comes after blockchain leaders, including Ethereum founder Vitalik Buterin, called for Terra to compensate smaller holders of UST and LUNA before the largest investors.
UST's share price fell further in response to Monday's announcement - from $0.15 to $0.07.