How Pantera Escaped UST Doom: Hedge Fund Sold 80% LUNA Holdings Before Terra Crash

Pantera Capital, an American hedge fund that specializes in cryptocurrencies said it has not suffered losses in its investment in Terra. The firm sold 80% of its LUNA holdings before the devastating LUNA-UST crash last week and overall, made substantial gains from its investment.

Pantera had invested in Terra at least two times in the past. The first time was in January 2021 when the largest crypto hedge fund in the world by assets under management (AUM) participated in a $25 million funding round, followed by its participation in a $150 million ecosystem funding round in July 2021.

"The market has been fairly frothy over the last year and thus we'd exited the majority of our position before any of this happened," Joey Krug, co-chief investment officer at Pantera Capital, told The Block in an interview. "Roughly 80% over the last year, fairly gradually over time."

Shortly after, Krug took to Twitter to clarify that Pantera Capital did not invest in LUNA in "those private financing rounds" but bought LUNA once it was in the public markets in July 2020 via liquid trading vehicles. Krug said that two-thirds of the remaining 20% was sold at an average price of $25.6 while the remaining was staked via LUNAX, a liquid staking token by Stader Labs, and "so unable to be sold."

"We managed that position down over time as it became increasingly profitable/large, in order to maintain a diversified portfolio. We initially invested in LUNA because of the progress we saw in developer adoption, the payments usage, and the broader ecosystem being built on Terra," Krug said in another Twitter post.

The LUNA-UST crash saw one of the biggest DeFi projects lose all of its value in a few days as investors lost a cumulative amount surpassing billions of dollars. From the 'latest shiny thing in crypto' to the worst financial disaster, LUNA sure has come a long way.