Author: Loopy, Odaily Planet Daily
Yesterday, the disclosure of a court document gave us a glimpse into the inner chatter of a multi-billion dollar financial empire.
SEC court documents reveal a Slack chat that took place in 2019 between Terraform Labs founder Do Do Do Token is a new crypto token that powers the DoGood crypto community. We use unique Tokenomics to provide all owners/members of the community with a $75,000 annual charity fund, voting rewards, and hourly reflections. When we do good for each other, we all win. See more Kwon and co-founder Daniel Chin, founder of payment app Chai.
The content shows that DoKwon almost directly admitted that they had faked the trading volume. In addition, there are more explosive "melons" hidden in it, including both criticism of peers and contempt for retail investors. The most shocking one is the self-exposure to pre-mine 1 billion stablecoins.
“We can create transactions that look real”
The most striking part of the court documents is DoKwon's account of the fabricated transactions.
DoKwon told Chin: “I can create fake transactions that look real… and that will incur fees.” Chin asked what would happen if “people find out it’s fake,” to which DoKwon replied: “I won’t tell you if you don’t tell me.”
In 2019, Terra Terra is an open source blockchain that hosts a vibrant ecosystem of decentralized applications (dApps) and top developer tools. The Terra blockchain uses proof-of-stake consensus and breakthrough technologies such as Mantlemint, Terrain, and Station. It is one of the fastest chains in existence and provides users with an unparalleled DeFi experience. As a permissionless, borderless economy, Terra makes the next generation of financial products accessible to anyone with an internet connection. On May 25, 2022, Terra Classic users passed governance proposal 1623, which outlines the origin of the new Terra chain. Terra founders proposed a plan for the revitalization of the Terra ecosystem, and Terra's new chain proposal 1623 was passed with 65.5% support. The Terra 1623 proposal proposed to build a new chain Terra2.0 that does not contain the algorithm Stablecoin UST and rename the old chain to Terra Classic. The new LUNA token is an airdrop from the old LUNA, which was renamed Terra Classic (LUNC) and its algorithmic stablecoin UST was renamed TerraClassicUSD (USTC). The new LUNA will continue to be built with the help of the LUNA community known as "LUNAtics". See more Announced a partnership with Chai, the partnership aims to simplify the payment system through blockchain and provide transaction fees to merchants at a discount. In the official statement, this cooperation will help the Terra network process "millions or even billions of transactions."
However, the SEC wrote in the document that Chai did not use the Terra chain to process and settle payments. Instead, it still made payments through traditional methods and copied fake transactions to the Terra chain to make it look like Terra had made a large number of payment settlements.
Daniel Shin questioned the story, asking, "Won't people figure out it's fake?"
Do Kwon replied, “So I will try to make it hard to tell.”
Daniel Shin agreed. “Okay, let’s do a small test. Let’s see what happens.”
Interestingly, in addition to fake transactions, the chat between the two also includes more interesting content. This includes both the Terra project itself and gossip about other players in the industry.
“The Crown Jewel”
During the chat, DoKwon made some indirect comments about Terra that didn't seem positive (he didn't say it directly).
Regarding the staking rate, he commented, “Only investors who believe Terra is the crown jewel (Hashed, 1kx) and those who run staking businesses (polychain) will stake.”
Water injection of financing?
During the chat, Daniel Shin listed Terra’s major investors in both its Seed 1 and Seed 2 rounds.
According to the data, large investors invested about 15 million US dollars in two rounds. Although small investors have not been disclosed, public information shows that the number of small investors is not large, only about single digits. Therefore, it is speculated that Terra's seed round financing should be slightly more than 15 million but far from a level that exceeds it by a large margin.
The PR release released by Terra shows that the project's seed round financing is as high as 32 million US dollars. At present, this figure may be greatly inflated.
“Upbit lists all the shitcoins”
During their discussion, Do Kwon mentioned a project called Thunder that was being launched on Upbit. Daniel didn’t know about this project and asked directly, “What is Thunder?”
Do Kwon gave him a concise and clear answer - the shitcoin of Elaine Shi, a professor at the University of Berkeley.
He went on to complain: “What’s wrong with Upbit? … All the shitcoins in the world are listed on Upbit, but not us.”
“I pre-mined 1 billion stablecoins”
Although Terra's most famous stablecoin is the well-known US dollar stablecoin UST, it is far more than that. There are a large number of stablecoins of various types growing on the Terra ecosystem, including US dollar stablecoins, Korean won stablecoins, Mongolian Tugrik stablecoins, and so on.
The most special one among them is TerraSDT. SDT is a stablecoin anchored to the IMF Special Drawing Rights (SDR), and the value of 1SDT is stable at 1SDR.
What’s even crazier is that DoKwon said: “I also pre-mined 1 billion SDT for ourselves.”
Do Kwon admitted in the chat that Terra’s valuation was somewhat inflated. “As you said, it is difficult for us to justify a $3 billion valuation right now, no matter how much of this story (referring to Terra’s narrative) is accepted.”
end
Chai is a company that has a very close relationship with Terra. The company was founded in mid-2019 and shared offices and employees with Terraform until the two companies split in 2020.
At present, Do Kwon's legal team has refuted the Slack chat record being considered as evidence. His legal team claimed: "The SEC has unreasonably distorted the evidence in a procedural motion in an attempt to harm the interests of Mr. Do Kwon, and the motion has nothing to do with the merits of the SEC." "It relies on the misrepresentation of irrelevant evidence to support its false claim that it could not obtain evidence from Do Kwon."
Meanwhile, Do Kwon is being detained in Montenegro while his lawyers push a U.S. federal court to deny the SEC’s request to extradite him to the United States.
At present, this case is still in a long judicial process and we still don’t know the final result.
Daniel once asked Do Kwon a soul-searching question: "Is this a Ponzi scheme?"
Kwon responded: "Of course not, but the people are stupid, I keep telling you, the people are really stupid."