UST Backer LFG Seeks $1B to Shore Up Stablecoin Peg: Report

The funding is needed because the dollar-pegged stablecoin dropped as low as 60 cents Monday amid broader market turmoil.

AccessTimeIconMay 10, 2022 at 8:41 p.m. UTC
Updated May 11, 2023 at 6:50 p.m. UTC

The Luna Foundation Guard (LFG), stewards of Terra’s UST stablecoin, are looking to raise over $1 billion.

According to The Block, LFG will use the cash to help restore UST’s dollar peg. On Monday the algorithmic stablecoin fell as low as 60 cents amid broader crypto market turmoil. It has been around 90 cents on Tuesday.

Jump, Celsius, Jane Street and (perhaps) Alameda are reportedly in talks for a deal that will allow them to purchase LUNA, Terra's token, at a 50% discount. The tokens would be subject to a one-year lockup and vest monthly in year two, according to The Block. The firms did not immediately respond to CoinDesk's request for comment.

LFG did not comment on the funding round when reached by CoinDesk. Earlier Tuesday, Do Kwon, the founder of Terra creators Terraform Labs, tweeted: “Close to announcing a recovery plan for $UST. Hang tight.”

UST uses blockchain-based mint and burn mechanisms to, in theory, keep its price at exactly $1. It uses LUNA as a sort of shock absorber for UST volatility by guaranteeing that 1 UST can always be swapped for $1 in LUNA, which has a floating price.

When UST fell as low as 60 cents on Monday, it sent shockwaves through the entire decentralized finance (DeFi) industry, even sparking comments from U.S. Treasury Secretary Janet Yellen on the risks of crypto stablecoin bank runs.

As UST cratered and the price of LUNA dropped nearly 50%, LFG deployed over $1.5 billion of its newly formed bitcoin (BTC) reserves to defend UST’s peg.

With the help of professional market makers, the reserves appear to have successfully lifted the price of UST back up to 92 cents at press time. This was a major boost from Monday’s lows, but it doesn’t count as a full recovery given UST remains below its dollar peg.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Sam Kessler

Sam is CoinDesk's deputy managing editor for tech and protocols. He reports on decentralized technology, infrastructure and governance. He owns ETH and BTC.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.