Do Kwon was accused of taking out billions from Terra’s ecosystem before the massive Terra/UST collapse.
Covered:
- Terra Founder Accused Of Selling Out Ecosytem
- Do Kwon Responds To Accusations
Terra Founder Accused Of Selling Out Ecosytem
This created incredibly thick, near-immovable liquidity near the top of the peg zone (the $0.98 to $1.00 range). In a nutshell, it would allow for someone to cash out billions of UST for MIM at a 1:1 rate without disturbing the peg – all thanks to inorganic demand. (6/13)
— FatMan (@FatManTerra) June 11, 2022
Terra founder Do Kwon was accused by a Twitter user (who goes by the name of FatmanTerra) of siphoning billions of dollars from the Terra ecosystem. Do Kwon has long stood by the fact that he didn’t sell his LUNA and lost his money in solidarity alongside his community.
However, the accusations from FatmanTerra center around Terra ecosystem tokens, which Kwon allegedly sold off 33 times over the course of a few months. The total sells offs is estimated to have garnered 2.7 billion USD.
“UST is the future, he said. Decentralized money is sound money, he said. UST won’t depeg, he told you. ‘Centralized stablecoins will rug you eventually.’ So why did he cash out $2.7b from UST into USDT and USDC? Were all those words just lies? (Spoiler: yes.),” said FatmanTerra.
FatmanTerra goes on to explain in detail his theory which involves Abracadabra and MIM token. In short, FatManTerra alleges that since Kwon couldn’t cash out his LUNA without causing a depeg, or a liquidity crunch, the founder got around that by encouraging incredibly high interest rates from projects in his ecosystem. This would allow him to cash out via their protocol tokens. “No need to dump LUNA or sell UST on exchanges – he drummed up liquidity from all of you,” Fatman Terra said. For more detailns, the rest of the thread is available here.
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Do Kwon Responds To Accusations
1/ This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false
— Do Kwon ? (@stablekwon) June 12, 2022
Do Kwon has categorically denied the accusations. Interestingly, the Terra co-founder decided to unprivate his Twitter (it had been only available to followers of late) in order to respond to the allegations.
“Two contradictory claims seem to exist where: 1. Do’s wallets are doxxed, and he still owns most of his luna through the airdrop 2. Do dumped all his tokens to make billions A lane should ideally be picked,” Kwon said. The beleaguered founder also reiterated the situation with his Luna Tokens: “3/ To reiterate, for the last two years the only thing ive earned is a nominal cash salary from TFL, and deferred taking most of my founder’s tokens because a) didn’t need it and b) didn’t want to cause unnecessary finger pointing of “he has too much”.
Notably, the response does not directly address whether Kwon or TFL used the methods theorized by FatmanTerra, and instead focuses on salary and LUNA tokens.
Nevertheless, Kwon stands by his innocence, noting, “Please say things that are proven and true – if you are spreading falsehood that just adds to the pain of everyone who has lost…”
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