Written by: 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 Kwon and another co-founder, Daniel Chin, founder of payment application Chai.

The content shows that Do Kwon 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 of them all is the self-exposure of pre-mining 1 billion stablecoins. Odaily Planet Daily takes you into the melon-eating moment and quickly sees what Do Kwon said.

SEC court documents reveal a Slack chat that took place in 2019 between Terraform Labs founder Do Kwon and another co-founder, Daniel Chin, founder of payment app Chai.

The content shows that Do Kwon 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 of pre-mining 1 billion stablecoins. Odaily Planet Daily takes you into the melon-eating moment and quickly sees what Do Kwon said.

“We can create transactions that look real”

Perhaps most striking in the court documents is Do Kwon's account of the fabricated transactions.

Do Kwon 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 Do Kwon responded, “If you don’t tell me, I won’t tell you either.”

In 2019, Terra announced a partnership with Chai, which aims to simplify the payment system through blockchain and provide merchants with transaction fees 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, Do Kwon made some indirect comments about Terra that didn't seem positive (he didn't say it directly).

Commenting on the staking rate, he said, “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 large investors in both the Seed 1 and Seed 2 rounds.

From 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.

According to Terra’s PR release, the project’s seed round financing was as high as $32 million. 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 growing on the Terra ecosystem, including US dollar stablecoins, Korean won stablecoins, Mongolian Tugrik stablecoins, and so on.

The most special one is Terra SDT. SDT is a stablecoin anchored to the IMF Special Drawing Rights (SDR). The value of 1 SDT is stable at 1 SDR.

What’s even crazier is that Do Kwon said: “I also pre-mined 1 billion SDT for ourselves.”

Do Kwon admitted in the chat that Terra's value is a bit inflated. "As you said, it is difficult for us to justify the $3 billion valuation now, no matter how much of this story (referring to Terra's narrative) is accepted."

end

Chai is a company that has close ties to 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 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 are pushing 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.”