Luna Foundation Guard (LFG), a non-profit organization linked to Terraform Labs, has moved its crypto holdings to a direct custody solution for enhanced security. This move comes after Terraform Labs and its CEO, Do Kwon, settled a civil fraud case with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a total of $4.5 billion in penalties.

LFG announced the transfer of funds, including Bitcoin, to a more secure direct custody solution on the social media platform X (formerly known as Twitter). The move has raised concerns among crypto investors, as Terraform Labs is currently under bankruptcy protection and winding down its businesses and assets to fulfill the SEC settlement.

According to LFG, the direct custody of crypto assets such as AVAX, BNB, BTC, LUNA, and UST (now USTC) will improve the security of funds in their wallets. Recent data revealed that LFG shifted a significant amount of $94.7 million in crypto holdings to a new address, transferring 1.974 million AVAX worth $71.19 million and 39,499 BNB worth approximately $23.5 million.

To maintain transparency and traceability, LFG has established the LFG Reserves Dashboard to track the available funds in their linked wallet addresses. As of now, the total reserve balance stands at $124.36 million, with Bitcoin holdings of $19.13 million, Avalanche (AVAX) worth $49.71 million, and BNB worth $32.87 million.

Terraform Labs CEO Chris Amani has confirmed the burning of LUNA holdings in wallets related to TFL and LFG. The Terra Luna Classic community will also burn LUNC and USTC in the wallets.

As Terraform Labs winds down its operations, it has put several major crypto projects up for sale, including Pulsar Finance, Station Wallet, and Enterprise Protocol. The prices of crypto assets held by the company have dropped significantly due to concerns over potential selloffs and the overall negative sentiment in the crypto market.