$3 Billion Worth Of Bitcoin Was Sold In An Effort To Prevent The UST Stablecoin From Collapse

The amount of short-term financial assistance is still being determined, but two people familiar with the talks told Reuters that it is likely to cover Ukraine’s financial needs for two months, primarily through loans.

A third official said the cash will come from the EU budget and EU countries, refuting prior speculation that the funds may be generated in the market by issuing joint bonds backed by the EU budget.

In April, the International Monetary Fund (IMF) anticipated that Ukraine would require $5 billion per month for at least three months to cover the immediate financial gap created by Russia’s invasion.

Kristalina Georgieva, the Fund’s CEO, has requested that this assistance be provided in the form of grants rather than loans.

The extent of EU assistance will also be determined by how much the G7 countries are willing to contribute. The Group of Seven major economies’ finance ministers will meet in the second half of this week, shortly after the Commission is likely to reveal its ideas.

The Commission’s reports did not include any remarks.

EU member states will have to approve the Commission’s plan, which they may try to change.

Governments are split on how to help Ukraine, with many preferring loans despite the IMF’s reservations and Ukraine’s likely inability to repay them. According to EU diplomats, Germany is one of a handful of EU states that support grants.

Officials said the package might include a mix of grants and loans. The funds would go for salaries, pensions, and healthcare expenses.

The additional package would be in addition to the 1.2 billion euros in EU emergency loans to Kyiv approved in January, half of which has already been disbursed and the rest likely to be paid soon, according to a Commission spokesperson.

Officials said the Commission will also announce its commitment to support Ukraine’s long-term rehabilitation on Wednesday, laying out principles for what is expected to be a massive financial undertaking worth trillions of euros.

(Adapted from USNews.com)

Investors have been curious as to what happened to the $3 billion in bitcoin purchased by crypto company Terra to support its failing stablecoin. They’ve received their response.

Last week, the Luna Foundation Guard, a fund established by Terra founder Do Kwon, spent virtually all of the bitcoin in its reserve in a failed bid to save terraUSD, or UST, for short.

The foundation had amassed over 80,000 bitcoins, which were valued more than $3 billion last week. Kwon had vowed to utilise bitcoin if the value of the UST dropped dramatically.

Luna Foundation Guard said it transferred 52,189 bitcoin to “trade with a counterparty” after UST went below its anticipated $1 peg in a series of tweets. Terra sold another 33,206 bitcoin in a last-ditch effort to defend the peg, according to the foundation.

Luna Foundation Guard had only 313 bitcoins in its reserve as of Monday, worth about $9.3 million. The company stated it would “compensate existing customers” of UST with the rest of its assets, which include several other digital currencies like BNB and avalanche.

“We are still debating through various distribution methods, updates to follow soon,” Luna Foundation Guard said.

The stablecoin UST is a “algorithmic” stablecoin. Unlike tether and USDC, which use a reserve of fiat assets to back their tokens, UST used a sophisticated mix of code and a floating token called luna to balance supply and demand and keep the price stable.

Last week, when UST began to go below $1, luna began to sell out as well, resulting in a vicious cycle in which UST fell below $30 while luna became worthless. According to CoinGecko, UST is now only worth 9 cents.

The demise of Terra’s tokens sent shockwaves through the crypto markets, wiping out more than $200 billion in a single day. Bitcoin momentarily dropped below $26,000 on Thursday, its lowest level since December 2020.

(Adapted from CNBC.com)


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