Luna Foundation Guard, the official custodian of the Terra Bitcoin Reserve, released a statement on Monday documenting how it paid out millions of dollars worth of the cryptocurrency in a failed attempt to maintain the stablecoin’s terraUSD peg.

Luna Foundation Guard (LFG), the official custodian of the Terra Bitcoin Reserve, released a statement on Monday documenting how it paid out millions of dollars worth of crypto in a failed attempt to maintain the peg to the stablecoin terraUSD (UST) currency.

In a statement, LFG noted that its BTC reserves were almost completely depleted – crashing from around 80,000 BTC to around 300. The remaining assets, mainly composed of collapsed UST and LUNA tokens, will be used to compensate investors.

In one of the most catastrophic events in cryptocurrency historical memory, the $40 billion Terra ecosystem collapsed last week when the UST stablecoin, a currency that was supposed to be consistently worth $1, fell below 20 cents. The LUNA token was designed as a shock absorber for UST’s “algorithmic” USD peg mechanism, which saw its value rapidly plummet from $80 to below $0.002.

In a tweet on Monday, LFG stated that it passively sold off most of the BTC it had reserved for UST as Terra’s ecosystem began to collapse early last week. LFG said it moved more than 50,000 BTC "to counterparties" on May 8 alone, as the price of UST, a stablecoin, initially began to slide. The funds were used to "directly execute on-chain swaps and transfer $BTC to a counterparty to enable them to conduct large-scale transactions with the foundation in a short period of time."

html On May 12, LFG said that another 30,000 BTC in its reserves were sold off by Terraform Labs (TFL) (the original company behind Terra) in a "last-ditch effort to defend the value of the currency."

LFG confirmed that the remainder of its reserves, which once totaled more than $3 billion, were almost completely sunk as efforts to defend UST's price stability failed. The remaining assets will be used to "compensate remaining UST users, starting with the smallest holders."

LFG’s statement on Monday follows criticism that Terra’s reserve funds – which are supposed to belong to the “decentralized” Terra community – are being handled with a lack of transparency by Terra’s centralized leaders and investors.

This is why major figures in the blockchain space including Ethereum founder Vitalik Buterin have called on Terra to compensate small holders of UST and LUNA before its largest investors. The price of

UST plunged further on Monday’s announcement – ​​from $0.15 to $0.07.