Unlike collateralized stablecoins such as Tether, UST primarily used algorithms and trader incentives involving its sister coin Luna to maintain a 1-to-1 peg with the dollar. As the token grew in prominence, its backers started to build a massive war chest of Bitcoin and other cryptocurrencies as an additional backstop to UST.

LFG held 80,394 Bitcoin as of May 7, before TerraUSD (UST) started dropping from its peg, it said in its tweet. Based on the closing price that day, the Bitcoin hoard was then worth $2.88 billion. LFG said it now holds 313 Bitcoin, worth about $9.3 million at current market prices. Its overall crypto reserves have dwindled to about $236 million as of early Monday, Bloomberg-compiled data show.

The remaining reserves will be used to compensate UST holders, with the smallest ones first in line, LFG tweeted. That’s a tiny fraction of the more than $16 billion in market value UST has lost since it crumbled from its dollar peg. LFG didn’t immediately reply to an email seeking comment.

Crypto Hedge-Fund Head Predicted Terra’s $60 Billion Implosion

In total, investors may have lost as much as $42 billion in total in the crash of UST and Luna, according to David Carlisle, vice president of policy and regulatory issues at crypto researcher Elliptic. That’s on top of the wider devastation wrought upon apps and developers on the Terra blockchain that underpins the two tokens.

“The Terra case will light a major fire under an already intensive regulatory debate about the consumer protection, market conduct, and financial stability risks of crypto,” Carlisle said in an email.