When will Terra’s victims be compensated?

No timetable for compensation

Terra victims won’t be getting their money back anytime soon. The official Twitter account of the Luna Foundation Guard (LFG) has posted on a series of tweets today stating that no timetable had been set to repay investors who lost money in the Terra collapse.

2/ 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.

– LFG | Luna Foundation Guard (@LFG_org) October 7, 2022

“As mentioned, our goal is to distribute LFG’s remaining assets to those who have been affected by the depeg, the smallest holders first“, said the account. “Unfortunately, due to ongoing and threatened litigation, distribution is not possible at this time.“The organization added that no date could be set for reimbursement while legal issues remain to be resolved.

10/ The Foundation is looking to use its remaining assets to compensate remaining users of $UST, smallest holders first.

We are still debating through various distribution methods, updates to follow soon.

– LFG | Luna Foundation Guard (@LFG_org) May 16, 2022

The entire Terra ecosystem collapsed in early May, when the project’s native stablecoin, UST, plunged into a death spiral, directly destroying nearly $43 billion in market value. LFG, a nonprofit organization charged with protecting stablecoin, stated on May 16 that it would use its remaining assets to compensate UST users, and that it would target small bag holders first.

Is LFG honest?

There are reasons to take LFG’s compensation claims with caution. The problematic disputes mentioned in the tweets certainly include the current problems of Terra’s frontman, Do Kwon. Kwon’s whereabouts are currently unknown: Interpol has requested that he be arrested. added to its wanted list, which means he is now officially a fugitive in 195 countries. Incredibly, Kwon recently took to Twitter to claim that, contrary to the information, he was not “on the run“. Kwon’s behavior suggests that he has little interest in surrendering to the authorities and resolving his legal situation in South Korea. It is therefore rather rich of LFG to claim that compensation for victims cannot currently move forward until the legal situation is clarified.

I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide

– Do Kwon 🌕 (@stablekwon) September 17, 2022

In any case, the organization claims to have used almost all of its $3 billion in bitcoin reserves to try to save UST’s anchor, to no avail. The only wallet that LFG has confirmed currently holding 313 BTC, or $6,072,200 at today’s price. And it appears that these are the only funds LFG plans to distribute. While $6 million is nothing to sneeze at, it pales in comparison to the losses suffered by UST holders. Even if all of Kwon’s legal cases were resolved, victims may be disappointed by the size of the repayment plan.

The LFG treasury’s $BTC wallet is:

bc1q9d4ywgfnd8h43da5tpcxcn6ajv590cg6d3tg6axemvljvt2k76zs50tv4q

LFG hasn’t created any new wallets or moved $BTC or other tokens held by LFG since May 2022.@CoinDesk @iamsandali @cryptoquant_com https://t.co/VFN8A4mJRo

– LFG | Luna Foundation Guard (@LFG_org) September 27, 2022

In addition, there is the possibility that LFG is not being honest about the extent of its current holdings. South Korean police recently asked OKX and KuCoin exchanges to freeze accounts totaling about $66 million in bitcoins, which investigators believe may belong to Kwon. Another researcher found that the entity that funded the official LFG wallet with its current 313 BTC still has more than $140 million in bitcoins in an unhosted wallet. While there is no concrete evidence that LFG is lying about the extent of its holdings, it is a possibility.