Do Kwon chat records exposed: Big revelations continue, far more than just fake transactions

*Written by: Loopy, * Odaily Planet Daily

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

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

The content shows that Do Kwon almost openly admitted that they faked trading volumes. In addition, there are more explosive "gossip" hidden within, including attacks on peers and disdain for retail investors. The most shocking revelation was the admission of pre-mining 1 billion stablecoins. Odaily Planet Daily takes you into the moment of gossip, giving a quick overview of what Do Kwon said.

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

The content shows that Do Kwon almost openly admitted that they faked trading volumes. In addition, there are more explosive "gossip" hidden within, including attacks on peers and disdain for retail investors. The most shocking revelation was the admission of pre-mining 1 billion stablecoins. Odaily Planet Daily takes you into the moment of gossip, giving a quick overview of what Do Kwon said.

"We can create transactions that look real"

In the court documents, the most striking statement was Do Kwon's remarks about faking transactions.

Do Kwon told Chin: "I can create fake transactions that look real… it will incur costs." Chin asked what would happen if "people find out it's fake," to which Do Kwon replied, "You don't say, I won't say."

In 2019, Terra announced a partnership with Chai aimed at simplifying the payment system through blockchain and offering discounted transaction fees to merchants. In the official statement, this partnership was said to help the Terra network handle "millions or even billions of transactions."

However, the SEC wrote in the documents that Chai did not use the Terra chain to process and settle payments. Instead, it continued to make payments through traditional means and copied fake transactions onto the Terra chain to create the appearance that Terra was conducting a large volume of payment settlements.

Daniel Shin questioned this event, asking, "Won't people find out it's fake?"

Do Kwon replied, "So I will try to make it hard to distinguish."

Daniel Shin expressed agreement, saying, "Okay, let's do a small-scale test. Let's see what happens."

Interestingly, besides faking transactions, their chat included more intriguing content. This included gossip about the Terra project itself and other industry players.

"The jewel in the crown"

In the chat, Do Kwon made what seemed to be a not-so-positive side comment about Terra (he did not say it outright).

Regarding the staking rate, he commented, "Only those who believe Terra is the jewel in the crown (Hashed, 1kx) and those who run staking businesses (polychain) will stake."

Inflated financing?

In the chat, Daniel Shin listed the large investors in the Seed 1 and Seed 2 rounds of financing for Terra.

From the data, large investors collectively invested about $15 million in both rounds. Although the number of small investors was not disclosed, public information indicates that there were not many small investors, only about a handful. Therefore, it is speculated that the seed round financing for Terra should be slightly over $15 million but far from significantly exceeding that level.

However, the public relations release from Terra stated that the project's seed round financing reached $32 million. Currently, this figure may be significantly inflated.

"Upbit listed all the shitcoins"

In their discussion, Do Kwon mentioned a project called Thunder that was launching on Upbit. Daniel was unaware of this project and directly asked, "What is Thunder?"

Do Kwon succinctly answered him—it's a shitcoin from Berkeley professor Elaine Shi.

He continued to complain, "What's wrong with Upbit? … All the shitcoins in the world are listed on Upbit, but not us."

"I pre-mined 1 billion stablecoins"

Although Terra's most famous stablecoin is the well-known U.S. dollar stablecoin UST, it is far from the only one. The Terra ecosystem hosts a large variety of stablecoins, including U.S. dollar stablecoins, South Korean won stablecoins, Mongolian tugrik stablecoins, and more.

Among them, the most special is Terra SDT, which is a stablecoin pegged to the IMF Special Drawing Rights (SDR), with 1 SDT maintaining a stable value of 1 SDR.

Even more crazily, Do Kwon stated: "I also pre-mined 1 billion SDT for ourselves."

Do Kwon candidly admitted in the chat that the value of Terra was somewhat inflated. "As you said, we are now very hard to justify a $3 billion valuation, regardless of how much of this story (referring to Terra's narrative) is accepted."

Epilogue

Chai is a company closely related to Terra. Founded in mid-2019, it shared offices and employees with Terraform until the two companies split in 2020.

Currently, Do Kwon's legal team has rebutted the consideration of this Slack chat record as evidence. His legal team claims: "The U.S. SEC has unjustly distorted evidence in a procedural motion, attempting to harm Mr. Do Kwon's interests, and this motion has nothing to do with the rights and wrongs of the U.S. SEC." "This relies on misstatements of irrelevant evidence to support its false claims that it cannot obtain evidence from Do Kwon."

Meanwhile, Do Kwon is being detained in Montenegro, and his lawyers are pushing for the U.S. federal court to reject the SEC's request to extradite him to the U.S.

Currently, this case is still in a lengthy judicial process, and the final outcome remains unknown.

Daniel once posed a soul-searching question to Do Kwon: "Is this a Ponzi scheme?"

Kwon replied, "Of course not, but the public is stupid. I've been telling you, the public is really stupid."