Sources: Luna Foundation Guard aims to raise $1B+ to shore up its UST stablecoin; one deal in negotiations offers LUNA tokens for 50% off
which is meant to be pegged to the dollar — plummets below 30 cents Bloomberg : TerraUSD Backers Seek $1.5 Billion Rescue, Cashaa CEO Says Tweets: Larry Cermak / @lawmaster : The details I have heard but might not be final: - Jump, Celsius and Jane St. committed already, Alameda not yet - targeting $1B - $1.5B raise - 50% discount to LUNA spot with 1yr lock + monthly linear vest over 1yr - total of ~$700M in commitments as of morning https://twitter.com/... Justina Lee / @justinaknope : I guess a 50% discount isn't too attractive for a token that has *checks notes* lost 90% in the last 24 hours https://twitter.com/... Larry Cermak / @lawmaster : @Mudit__Gupta Yea as far as I can tell, the deal is dead LMAO @wublockchain : The Block Larry Cermak says LFG's $1 billion financing plan has failed. He previously said that Terra aims to raise $1-1.5 billion to “save” UST. Jump, Celsius and Jane St. have committed (about $700 million), but Alameda has not. https://twitter.com/... @amdtrades : The most successful companies start off with very little money because they're forced to become resourceful and grow steadily while not missing anything that could hurt the business. When a company has access to large capital right away, everyone gets comfortable. https://twitter.com/... @xamanap : Probably not enough dough. https://twitter.com/... @notsofast : I kind of hate what crypto has become https://twitter.com/... Frank Chaparro / @fintechfrank : Confirms they are still looking to bring in outside capital to “reduce supply overhang on UST” https://twitter.com/... @criptopaul : like a gambler who resorts to loans when he goes rekt https://twitter.com/... @raaleh : incredible that algorithmic stablecoins have gone from “new, revolutionary product” to “incredibly expensive centralised bailout” already https://twitter.com/... Frank Chaparro / @fintechfrank : I'm starting to think they're not close to having a plan @biancoresearch : The crypto federal reserve stepped in and are Kwontitative Easing UST back to its peg. https://twitter.com/... Frank Chaparro / @fintechfrank : Will touch base with my sources shortly, but given the price action this likely fell apart Luna Foundation Guard seeks more than $1 billion to shore up UST stablecoin: sources https://www.theblockcrypto.com/ ... Larry Cermak / @lawmaster : One thing to keep in mind is that this deal is not closed yet and is still in active negotiations. The terms now might be different and obviously, some parties could still de-commit. Would expect an announcement from LFG in the next two days and impressive interest is this high
Context & Ripple Effects
The rescue attempt caps a rapid escalation: Luna Foundation Guard bought another $1.5B in bitcoin on May 5 to backstop UST, then pledged reserves to defend the peg as it slipped to $0.60 on May 10 (losing its dollar peg) — and within a day UST was below $0.30. Now LFG is turning to outside capital rather than its own balance sheet.
The terms tell the story: Jump, Celsius and Jane Street have reportedly committed roughly $700M of a $1B–$1.5B target, with Alameda still out, and buyers get LUNA at a 50% discount locked for a year — pricing that reflects a token down ~90% in a day.
First-order effects
- Committed investors like Jump, Celsius and Jane Street would be buying LUNA at half of spot with a 1-year lock and monthly vesting — a bet that only pays if the UST peg and LUNA price recover before their exit windows open.
- UST holders get a potential backstop, but the raise does nothing for the ~152M LUNA tokens, about 30% of circulating supply, that Terra Analytics says are staked and unable to exit for weeks (locked in staking during the crash).
Second-order effects
- Defending the peg means liquidating the bitcoin reserves LFG accumulated days earlier, so the rescue converts a stablecoin run into forced BTC selling pressure exactly when markets are weakest.
- Alameda's absence from the commitment list signals that even the most crypto-native trading desks are pricing the deal as distressed, not opportunistic — raising the bar for any follow-on rescue syndicate.
Third-order effects
- If the pattern holds, algorithmic stablecoin defenses end up consuming their reserve assets faster than they restore confidence — an outcome the later accounting bears out, with an independent audit showing LFG spent $2.8B in crypto and Terraform Labs $613M trying to defend UST.
- The structure points toward rescue capital demanding deeper discounts and harder lockups in crypto bailouts, effectively transferring tail risk from protocol treasuries to trading firms willing to underwrite collapse scenarios.
The trend: Stablecoin issuers are shifting from reserve-backed defense to discounted emergency raises from trading firms, a financing model whose economics only work when confidence returns faster than the lockups expire.