Former Crypto Terra CEO Do Kwon Admits to Faking Trading Volume
Former crypto company Terra Labs CEO, Do Kwon, has confessed to faking trading volume, according to court documents from the U.S. Securities and Exchange Commission (SEC).
The SEC filing on September 22nd reveals text exchanges between Do Kwon and Daniel Chin, the founder of payment app Chai, in which Do Kwon admitted to creating fake transactions that appeared real but incurred fees.
Chai had partnered with Terra Do Kwon to expedite payments. However, Terra went bankrupt last year, leading the SEC to accuse Do Kwon of fraud.
In the SEC's lawsuit against Terra, they allege that the partnership was not as advertised to users, and Terra never replaced Chai's payment system.
These are significant allegations, especially considering that Chai's founder, Daniel Shin, co-founded Terraform with Kwon in 2018.
In a Twitter statement, Terraform Labs CEO Chris Amani dismissed the leaked text messages as inconsequential.
"This is a private conversation about the need to enhance validators to ensure chain security. In many cosmos chains, this is achieved through inflation rewards. Terra relies solely on fees, so they need another way to do it," said Amani, as quoted from Decrypt on Tuesday, October 3, 2023.
In 2019, Terra announced its partnership with Chai, stating in their blog post that they would rebuild the payment stack on the blockchain to streamline the outdated payment system and provide discounted transaction fees to merchants.