Update: LFG Says Ongoing Probe Hinders Clearing System, Binance’s First LUNC Token Burn Sets Tone

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Luna Foundation Guard (LFG), the non-profit entity supporting the original Terra Channel, shared an update on Friday regarding the distribution of remaining assets held in its reserve. In the aftermath of Terra’s crash, the Singapore-based organization said it plans to compensate investors, especially smallholders, using the balance of failed efforts to keep the ecosystem anchored and defend the chain against possible governance attacks.

“The remaining reserves of the Foundation consist of the following assets: 313 BTC, 39,914 BNB, 1,973,554 AVAX, 1 847 079 725 UST, 222 713 007 LUNA (of which 221,021,746 are currently staked with validators). The LUNA previously staked is non-adherent and will be returned in 20 days. The Foundation seeks to use its remaining assets to compensate the remaining users of US$the smallest holders first”, GLF declared after May’s crash.

Legal issues hamper distribution plans

LFG records show that the remaining holdings, including Bitcoin lent to OTC trading entities as proposed by LFG’s board, were equivalent to $105.65 million at the time of writing. The figure represents a significant decrease from the north of $4 billion at one point in May.

LFG reserve balance overview

The Foundation reaffirmed its intention to distribute the remaining assets to holders in the latest update, but said “ongoing and threatened litigation” prevents it from proceeding with the same. Holders of means of communication impacted by the crash of the ecosystem will have to wait for an indefinite period for any form of reimbursement. While the team has promised to share updates on new developments, it’s unlikely any compensation will be made until all legal issues around Terra are resolved.

Many, including investor-turned-whistleblower FatMan Terra, took issue with the response from Terra’s support organization. In a commentthe pseudonymous user objected and demanded that the LFG “complete [its] promise”, referring to the commitment to reimburse the victims concerned after having “defrauded” them.

The LFG update comes the same week that South Korea’s market regulator, the Financial Services Commission, was summoned to appear before lawmakers in the annual parliamentary audit. Among other agendas, Thursday’s audit session aimed to uncover the truth behind Terra’s crash. The annual event, however, did not bring much. Careful observers and other parties following closely have described him as the one who fell short.

Still, investigations into the Terra implosion continue, with the latest update on the matter being the release of a previously arrested Terraform Labs employee. The reported arrest of Yoo Mo, who oversaw Terra’s general affairs and business operations, marked the first arrest of anyone connected to the case by South Korean authorities on Thursday.

Terra (LUNA) down 87% since going live in May

The LUNA token, born as part of the new Terra chain in May, has lost value to the same extent, if not worse, than tokens that peaked long before it went live. Market data shows that the token retraced 87% from around $20 – its price on the first day of trading. Although no other top altcoin has seen gains in the 19-week time frame, the criticism of LUNA’s price action is reasonably fair. No top alts have dropped so much. For context, Bitcoin (BTC), Ethereum (ETH), and Cardano (ADA) lost around 32%, 24%, and 8.69%, respectively, over the same period.

More recently, the price of LUNA soared earlier this week, trading as high as $2.70 after Binance announced the first implementation of LUNC token burning.

LUNA/USD trading chart

The LUNA/USD pair’s fleeting slight gains were fueled by a positive market reaction after the exchange released the first figures representing the token equivalent of its spot and margin trading fees on LUNC pairs. The figures for this burn, valid until further notice, are updated every Monday. Binance CEO Changpeng Zhao revealed on Tuesday that the the first report was $1.8 million in LUNCapproximately 5.8 billion LUNC.

LUNC token burning snapshot

LUNA was writing on Sunday and was spotted around $2.50 on crypto aggregation platform CoinMarketCap. Notably, this recent hype around LUNC has led many in its community to request trading platforms such as Gemini, Coinbase, and Robin Hood consider listing the token.

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