SEC Drops Bombshell: Terra Founder Do Kwon Chat History Leaked

Alleged Fake Transactions Plan: According to the leaked chat history, Do Kwon and Daniel Shin allegedly discussed creating fake transactions on the Terra blockchain to generate fees during the project's development and to support their activities.

Discussion of Fake Transactions: Do Kwon suggested, "I can just create fake transactions that look real…which will generate fees… and we can wind that down as Chai grows." Shin expressed concern about people discovering that the transactions were fake, to which Do Kwon responded that he would try to make them indiscernible.

Testing on a Smaller Scale: After further discussion, Daniel Shin eventually agreed with Do Kwon's suggestion and proposed testing it on a smaller scale.

SEC's Claims: The SEC alleges that Terraform Labs, the company behind Terra, partnered with Chai in 2019 to settle transactions on the Terra blockchain. The SEC claims that Chai payments were presented as if they were occurring on the blockchain to deceive investors.

Investor Deception: According to the SEC, investors bought LUNA and other tokens believing that Chai transactions were being conducted on the Terra blockchain.

Response from Defendant's Attorneys: The defendant's attorneys opposed the SEC's request to allow Do Kwon to leave Montenegro. They argued that granting the SEC's request would prevent Terraform Labs from presenting a statement from Do Kwon during the summary judgment process.

Timeline of the Relationship: While the relationship between Terraform Labs and Chai ended in 2020, the SEC believes that it lasted long enough for the alleged deceptive plan to be carried out effectively.

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