Do Kwon, co-founder of Terraform Labs, has disputed the relevance of leaked Slack chats used as proof. Investor attraction via transaction manipulation was a topic of conversation between co-founder Daniel Shin and Do Kwon.
A September 2019 Slack chat between the company’s co-founders was included in a court filing by the U.S SEC. According to the chat log, Kwon and Shin were discussing how to attract more investors to Chai Corporation, a payments company located in Seoul. Midway through 2019, Kwon and Shin created Chai. And the company shared resources (including employees) with Terraform until 2020, when they went their own ways.
Making Up Bogus Transactions
Kwon, according to the exposed conversation, planned to make the project more appealing to investors by making up bogus transactions. Moreover, Kwon elaborates further, explaining that fees generated from the transactions may be used to phase down the system over time as Chai expands.
He then approaches Shin with the intention of striking a confidentiality deal. Kwon made the promise, “I won’t tell if you won’t.” He also said that it would be difficult for investors to learn about the manipulation strategies. On the other hand, Kwon denies the accusations leveled against him and claims the evidence was misinterpreted.
Kwon and Shin, according to his legal team, discussed staking LUNA tokens with validators as an alternative to forging Chai transactions. The SEC has asked a U.S. federal court to extradite Kwon to face charges related to the collapse of the Terra ecosystem, but Kwon’s attorneys are fighting this extradition.
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