Do Kwon’s chat records exposed: Big melons are constantly going on, far more than fake transactions

Original｜Odaily Planet Daily

Author｜Loopy

Yesterday, the disclosure of a court document gave us a glimpse into the internal chatter of the tens-billion-dollar financial empire.

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

The content shows that Do Kwon almost bluntly admitted that they had fabricated the transaction volume. In addition, more explosive “melons” are also hidden in it, including bombardment of peers and contempt for retail investors. The most shocking one is undoubtedly the revelation that 1 billion stablecoins have been pre-mined. Odaily Planet Daily takes you into the melon-eating moment and takes a quick look at what Do Kwon said.

“We can create volumes that look real”

The most striking thing in the court documents is Do Kwon’s statement about the forged transactions.

Do Kwon told Chin: “I can create fake transactions that look real… and that incurs a fee.” Chin asked what if “people find out it’s fake,” to which Do Kwon replied: If you don’t tell me, I won’t tell you either.”

In 2019, Terra announced a partnership with Chai, which aims to simplify payment systems through blockchain and provide merchants with discounted transaction fees. According to the official statement, this cooperation will help the Terra network handle “millions or even billions of transactions.”

However, the SEC wrote in the filing that Chai does not use the Terra Chain to process and settle payments. Instead, payments were still made through traditional methods, and false transactions were copied to the Terra chain to make it appear that Terra had conducted a large number of payment settlements.

Daniel Shin cast some doubt on the incident, asking, “Won’t people find out it’s fake?”

Do Kwon replied, “So I’ll try my best to make it indistinguishable.”

Daniel Shin agreed, “Okay, let’s do a small-scale test. See what happens.”

Interestingly, in addition to the fake transactions, the chat between the two also included 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 a seemingly unfavorable side comment about Terra (he didn’t say it outright).

Regarding the staking rate, he commented, “Only those investors who believe Terra is the crown jewel (Hashed, 1kx) and those who operate staking businesses (polychain) will pledge.”

Financing water injection?

During the chat, Daniel Shin listed Terra’s large investors in both its Seed 1 and Seed 2 rounds.

Judging from the data, large investors invested a total of approximately US$15 million in the 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 significantly exceeded level.

The public relations release disclosed by Terra shows that the project’s seed round financing is as high as 32 million US dollars. At present, this data may be greatly watered down.

“Upbit lists all spam coins”

During the discussion between the two, Do Kwon mentioned that a project called Thunder is being launched on Upbit. Daniel didn’t know about this project and directly asked “What is Thunder?”

Do Kwon answered him concisely and clearly - Berkeley University professor Elaine Shi’s shitcoin.

He also continued to complain: “What’s wrong with Upbit?.. All the garbage coins in the world have been listed by Upbit, but not us.”

“I pre-mined 1 billion stablecoins”

Although Terra’s most famous stablecoin is the well-known USD stablecoin UST, it is much more than that. There are a huge variety of stablecoins growing on the Terra ecosystem, including U.S. dollar stablecoins, Korean won stablecoins, Mongolian Tugrik stablecoins, and more.

The most special one is Terra SDT. SDT is a stable currency 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 the value of Terra is somewhat inflated. “As you say, we have a hard time justifying a $3 billion valuation right now, regardless of how many percent of that story is accepted.”

Ending

Chai is a company that has a very close relationship with Terra. The company was founded in mid-2019 and shared offices and employees with Terraform until 2020 when the two companies separated.

At present, Do Kwon’s legal team has refuted this Slack chat record as evidence. His legal team claimed: “The US SEC unreasonably distorted evidence in an attempt to harm Mr. Do Kwon’s interests in a procedural motion that has nothing to do with the merits of the US SEC.” “This relied on misrepresentation of irrelevant evidence to support its false claim that it was unable to obtain evidence from Do Kwon.”

Do Kwon, meanwhile, is being detained in Montenegro while his lawyers push for a U.S. federal court to reject the SEC’s request to extradite him to the United States.

At present, this case is still in the long judicial process, and we still don’t know the final result.

Daniel once launched a soul torture to Do Kwon: “Is this a Ponzi scheme?”

Kwon replied: "Of course No, but the people are stupid, I keep telling you, the people are really stupid.”