Genuine mistake or fraud? That’s the question Terra’s Do Kwon needs to answer
Do Kwon pleads his innocence on his twitter feed after latest reports condemn him for cashing out $2.7 billion. The Terraform Labs CEO is already facing an investigation from the SEC and South Korean police. He is now at the heart of a latest crypto community backlash.
“No Kwon do”
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 begins the thread with a statement that, “This should be obvious but the aim that I cashed out $2.7B out of anything categorically false.” This was a reply to many allegations surfacing on social media after a tweet from @FatManTerra. These allegations suggested that Do Kwon cashed out $80 million every month for nearly three years.
So what’s the alleged plan suggested by the Twitter handle @FatManTerra?
FatMan is an analyst at the Terra Research Forum who sparked a social media fury with his analysis of Do Kwon’s liquidation. He claimed that Do Kwon liquidated $80 million worth of Terra for 33 months using Degenbox. Now FatMan believes that this is the perfect mechanism to drain liquidity out of LUNA and UST into USDT.
He then provided liquidity examples of LFG’s outflows.
Here are TFL's outflows. $558m to KuCoin, $1.08b to Binance, $545m to Huobi – you get the gist. Ultimately, all of this money is liquidity being removed from the Terra ecosystem, exacerbating the collapse, bolstering TFL coffers – all while they lied to your face. (9/13) pic.twitter.com/qpMe3NzEph
— FatMan (@FatManTerra) June 11, 2022
Towards the end he proposed a “Call to action” for Do Kwon and his team:
– Clarify the purpose of these huge trades
– Publish a PDF breaking down the sources of LFG funds, since they were meant for UST holders
– Publish trade logs and counter-parties for the ‘peg defence’
Do Kwon, however, seemingly wanted to steer clear of these rumors as they “just add to the pain of everyone who has lost.” But the crypto community has been unforgiving since the Terra crash which resulted in losses amounting to $40 billion. The mismanagement of the Do Kwon and his team has been widely antagonized by major crypto analysts. But the news of “allegedly” cashing out before the crash has increased mass-scrutiny towards him.
Popular Youtuber Ben Armstrong went ballistic towards Do Kwon in his tweets later on. He said that “only a psychopath would invite this scrutiny. There’s no escape for him at this point.”
At the end of the day I think he was blindsided by this. Doesn’t absolve him from responsibility ofc
— Ben Armstrong (@Bitboy_Crypto) June 11, 2022
Armstrong added that despite cashing out $2B+ it is possible “does not mean he knew about the collapse.” He believes that maybe Do Kwon was just taking profits and was “blindsided” by this. Finally, Armstrong suggested that maybe Do Kwon was “too egotistical to believe Terra had a huge vulnerability.”