Terra’s Do Kwon accused of siphoning funds from network before the crash, again

Terra’s Do Kwon accused of siphoning funds from network before the crash, again
Terra founder Do KwonCanva
  • A host of users, led by a Twitter user called FatManTerra, have accused the founder of draining the network before its crash.
  • Kwon had earlier been accused of siphoning off $80 million per month from the network.
  • South Korea’s government has summoned Kwon as part of an investigation into the crash.
Terra founder Do Kwon’s plans to revive his beleaguered blockchain platform aren’t going too well. After a rough start to his revival plans last month, Kwon has now been accused of draining liquidity out of the network artificially before it crashed and left hundreds and thousands of investors worldwide in the lurch.

The allegations began after a Twitter user who goes by FatManTerra posted a detailed thread allegedly explaining how Kwon and other Terra influencers drained the network to buy stablecoins like Tether (USDT), which are pegged on the US dollar. The Terra stablecoin, in turn, was pegged on Bitcoin to maintain its value.

“Some of you thought $80m per month was bad. That's nothing. Here's how Do Kwon cashed out $2.7 billion (33 x $80m!) over the span of mere months thanks to Degenbox: the perfect mechanism to drain liquidity out of the LUNA & UST system and into hard money like USDT,” he wrote in the first of 13 tweets.

Luna’s value plummets

Kwon’s revival plans for the Terra network haven’t been going very well either. After the Luna cryptocurrency fell to nearly zero last month, the founder had proposed a revival plan that would include reworking the system and issuing new tokens. The Luna token has lost 54% value in the last two weeks, according to crypto market trackers.

On May 30, the token was priced at $11.33, but its price had fallen to around $2 at the time of writing. Which is a sign that the platform hasn’t been able to regain investor interest after the crash.


He also posted screenshots, claiming to show the funds outflow, and the tweets were followed by a plethora of other users who accused Kwon of the same.

Not the first time

This is not the first time Kwon has been accused of siphoning off funds from the Terra network either. On June 9, South Korean news agency Naver, reported that Kwon had withdrawn 100 million won (approximately $80 million) per month before the crash of his coveted cryptocurrency.

The report said that the US Securities and Exchange Commission apparently had proof of the same. Kwon has also been asked to appear before a government committee in South Korea over the crash.

To be sure, Kwon has denied the allegations, repeating his earlier claims that he doesn’t care about the money. “This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false,” he wrote on Twitter.

“To reiterate, for the last two years the only thing i've earned is a nominal cash salary from TFL, and deferred taking most of my founder’s tokens because a) didn’t need it and b) didn’t want to cause unnecessary finger pointing of “he has too much,” he said.

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