In a Twitter thread by Twitter user @FatManTerra, Terraform Labs CEO and co-founder Do Kwon was accused of siphoning $2.7 billion from the Terra Network, ultimately leading to the collapse of UST and LUNA. He responded by tweeting that the claims were “categorically false” claiming that he too lost most of his holdings from the crash.
According to FatMan, Kwon managed to do this by withdrawing $80 million each month over several months because extracting $2 billion at once would have caused an automatic crash. The UST extracted would then be converted to other stablecoins like USDT before being withdrawn.
How to take $2.7 billion unnoticed
The borrowing protocol called Degenbox was also useful to disguise the withdrawals while maintaining liquidity. Further, Kwon used CVX bribes in the form of SPELL to reward people voting for the pool’s gauge through Votium. Many influencers quickly picked up on it and they too began running the same scheme exacerbating the problem. FatMan also showed how these outflows from Terra were sent to KuCoin ($558 million), Binance ($1.08 billion and Huobi ($545 million).
It soon became clear that the platform was unsustainable but FatMan claims that Do Kwon didn’t care and kept on lying to investors. One developer from Anchor Protocol going by the moniker Mr. B allegedly warned Kwon of the insanely high rewards even before the release of UST, instead urging a modest 3.6% return rather than the 20% that was being offered.
What’s next for Do Kwon?
Do Kwon is already facing legal trouble both in South Korea where he has been summoned for a parliamentary hearing while the SEC is conducting investigations into the crash. Kwon still maintains his innocence saying he “really doesn’t care about money” and that he has only been receiving a “nominal cash salary from TFL”.