Elliptic tracks LFG Bitcoin reserve flow: Money flow breakpoint at centralized exchanges; dForce founder: Retail pressure is crucial

The blockchain analysis company Elliptic analyzed the flow of Bitcoin reserves held by the LFG Foundation through its tools and found that most of them have been transferred to exchanges, but it cannot be further confirmed whether they are used to support the UST price.

After the collapse of UST and LUNA, everyone is asking: where is the Bitcoin reserve and is it playing a stabilizing role? Founder Do Kwon has yet to provide an explanation and instead shifted focus to forking the Terra blockchain and reallocating new LUNA tokens to holders within certain conditions of UST and Terra.

The First Batch Ends Up at Gemini, Purpose Uncertain

Blockchain analysis company Elliptic tracked the flow of Bitcoin reserves held by the LFG Foundation:

On 5/9, LFG announced that they would use $750 million worth of Bitcoin to anchor UST to one US dollar, but later clarified that it would be used for "trading." At this point, 22,189 BTC were transferred from LFG addresses to a certain address; subsequently, other wallets of LFG also transferred a total of 30,000 Bitcoins to that address.

Subsequently, multiple transactions flowed into the same account at the U.S. exchange Gemini. Elliptic stated that due to multiple Bitcoin transactions during this period, it cannot confirm whether these Bitcoins were sold to support the price of UST.

Remaining Bitcoins Transferred to Binance

Blockchain analysis company Elliptic stated that on 5/10, the remaining 28,205 Bitcoins in the reserve were all transferred directly to Binance, also with an uncertain purpose.

The Black Box Breakpoint of On-Chain Fund Flow

Although on-chain transactions are anonymous, the final destination can still be clearly understood. Block explorers like Etherscan, blockchain analysis companies, and regulatory agencies can tag identity information to specific addresses. In order to conceal on-chain fund flows, many people choose on-chain mixers. Note: Tornado Cash has also begun to have sanction policies. Another way to conceal on-chain fund flows is to enter the large fund pools of centralized exchanges, where once they become internal accounts of the exchange, on-chain analysis cannot be achieved.

Therefore, Elliptic's analysis results ultimately seem to be of little help. Elliptic also stated: "Centralized exchanges are often black boxes for on-chain analysis, however, law enforcement investigators can obtain fund flow information from these operators under specific circumstances."

dForce founder Mindao Yang believes that whether these Bitcoins are lent out or sold, they are processed through market makers, closely related to Terra. Exchanges should passively participate from the perspective of protecting retail investors, and the pressure from retail investors on exchanges is also crucial.