Terra is a blockchain protocol and payment platform used for algorithmic stablecoins. The project was created in 2018 by Terraform Labs, a startup co-founded by Do Kwon and Daniel Shin.
It is most known for its Terra stablecoin and the associated Luna reserve asset cryptocurrency.
On late Thursday a document was released by the SEC stating all the frauds allegee by the company and its founder Do Kwon.
From these statements it is clear the whole terra platform was a fraud as precise and calculated as the latest Sam Bankman Fried’s FTX.
It also mentioned a number of anonymous counterparties who are eventually mentioned as collaborators in the fraud.
Some of the major allegations are as follows…
1.Washtrade practice took place
In May 2021 when the TerraUSD faced a small depegging from its stable $1 target price. Arrangements with various third parties were made to purchase the coins and pump its price back to $1.
This was the Fact which was hidden by Do Kwon saying that TerraUSD had self healing abilities by which it was restored back to its original value.
2.Do Kwon and his homies were enjoying cashing out
A South Korean news site claimed to have spotted Do Kwon cashing out about $100,000 worth of BTC in Serbia.
They claim that Kwon and accomplices “transferred over 10,000 bitcoin from Terraform and Luna Foundation Guard accounts to an un-hosted wallet.”
They have, the SEC claims, converted over $100 million of that bitcoin into fiat withdrawals through a Swiss bank since June 2022.
3.Chai deal was also fake
It has been already understood that Do Kwon exaggerated the relationship between terra and the chai payment platform.
He stated that Chai has been using terra platform for payment processing even after there was no such partnership.
Now the SEC gives a detailed explanation of how it worked.
It describes the use of a server, known internally at Terraform as the “LP Server,” which “replicated the real transactions that Chai was processing in Korean won.” In reality, according to the charges, “no Chai transactions occurred on the blockchain.”
In short there was this fake server which Kwon used to move fake money to list fake transactions to deceive the investors.
All these statements are filed against Terra and Do Kwon for consciously misleading their investors. He also used his twitter account to promote TerraUSD to the Americans and to put down the critics who predicted the flaws.
Thus SEC has been doing its duties flawlessly by closing a case every week which is appreciable and also suspicious that in what way or manner they are targeting these firms.