Luna Foundation Guard Raises $1 Billion for UST Bitcoin Reserve
Singapore-based Luna Foundation Guard raised $1 billion through LUNA token sales to purchase Bitcoin for UST's reserve system, with Jump Crypto and Three Arrows Capital as lead investors.
The Luna Foundation Guard (LFG), a Singapore-based organization supporting the Terra ecosystem, announced on February 20, 2022, that it had raised $1 billion through the sale of LUNA tokens specifically to purchase Bitcoin as a reserve asset backing the UST algorithmic stablecoin. Jump Crypto and Three Arrows Capital served as lead investors in this massive fundraising round.
The strategy represented an attempt to give UST, which relied on algorithmic mechanisms rather than traditional dollar backing, additional stability through Bitcoin reserves. Do Kwon and the Terra team promoted this Bitcoin reserve as adding a layer of security to UST's peg mechanism—if UST lost its dollar peg, the foundation could theoretically deploy Bitcoin reserves to help restore stability.
For Bitcoin, Terra's accumulation strategy had mixed implications. On one hand, having a major DeFi protocol accumulating substantial Bitcoin holdings created buying pressure and represented institutional demand for Bitcoin as a reserve asset. On the other hand, using Bitcoin to back an experimental algorithmic stablecoin introduced systemic risk—if the Terra system failed, LFG might be forced to dump massive amounts of Bitcoin on the market, creating severe price pressure.
This concern would prove prescient just months later when Terra's collapse in May 2022 resulted in LFG deploying its entire Bitcoin reserve in a failed attempt to save UST's peg, contributing to Bitcoin's price crash.The $1 billion fundraising and planned Bitcoin purchases represented the height of confidence in Terra's model, just months before it would spectacularly implode.
Although centered outside Bitcoin, the event had an approved concrete Bitcoin consequence or comparison. The relevant connection came through market structure, BTC reserves or sales, regulation, mining, custody, or a broader risk mechanism that materially affected Bitcoin users.
In the 2022 chronology, the event also belongs beside simultaneous changes in monetary policy, regulation, mining economics, Bitcoin development, and the collapse of highly leveraged digital-asset companies. Those surrounding developments provide context without turning correlation into causation.
Its lasting value is the specific change it documented: who acted, what mechanism changed, and what practical consequence followed. That concrete distinction separates the event from routine announcements or ordinary market noise.