- The Securities and Exchange Commission charged TerraForm Labs with fraud.
- TerraForm Labs defense attorneys claim Do Kwon cannot attend the U.S. court.
- Do Kwon is serving a 4-month sentence for document forgery in Montenegro.
TerraForm Labs founder Do Kwon has admitted to artificially inducing trading volume on Terra’s blockchain. This was revealed in a leaked chat being used as evidence in the lawsuit initiated by the U.S. Securities and Exchange Commission (SEC).
The leaked documents reveal a conversation between the co-founding pair Do Kwon and Daniel Shin. This comes as the SEC continues to escalate the investor defrauding case, which includes criminal charges for capital market law breach and manipulation of cryptocurrency prices.
The conversation between the co-workers was recorded on Slack in September 2019. In the transcript, Do Kwon utters “I can make fake transactions that just look real.” After sensing that Shin is holding back on the suggestion, Kwon adds: “We can wind that down as Chai grows.”
Shin then asks: “Wouldn’t people find out it’s fake?” to which the notorious Terra Luna founder responds: “All the power to those that can prove it’s fake. Because I will try my best to make it indiscernible. I won’t tell if you won’t,” followed by a wink emoji.
A Partnership Gone Terra-bly Wrong
TerraForm Labs’ blockchain company partnered with Chai Corporation to accelerate the average payment speed, but the SEC alleges that TerraForm Labs never actually replaced Chai’s pay mechanism with Terra’s blockchain.
According to the SEC’s allegations, the Chai payment app’s transaction system was used for transactions that were labeled as ‘blockchain’ to the public, putting fake records on the Terra blockchain scanner.
Both crypto moguls are blamed for having manipulated $UST stablecoin, which was shredded to pieces in May 2022, along with the original $LUNA token.
As Do Kwon is currently serving four months of prison time in Montenegro for forging multiple identification documents, Terra’s defense team is fighting against his extradition to the United States, attempting to legally block the SEC’s request for deposition.
On the Flipside
- The newly-appointed TerraForm Labs CEO Chris Amani defended the leaked chat messages as “not damning.”
- Chris Amani argues that similar practices are being done with “inflationary staking rewards” to this day.
- Amani proclaims: “Terra relied only on fees so they needed some other way to do it.”
Why This Matters
The SEC’s crackdown on crypto comes after a market-wide domino effect caused by the Terra Luna fiasco in 2022. The case is crucial in order to bring closure to the crypto investors affected by the 2022 financial crisis.
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Source link: https://dailycoin.com/caught-in-act-do-kwon-boasts-about-thin-air-transactions/
