Illustration by Mitchell Preffer for Decrypt
Crypto fans, fear not. The worst is over. After seven long weeks of declines, prices finally stopped falling. Though how long that will hold is anyone’s guess.
Over on Crypto Twitter this week, Terra CEO Do Kwon stood in the dock as conspiracy theories were hurled at him and the entities he acted under during Terra’s historic collapse. Terraform Labs, the Luna Foundation Guard, and ultimately Kwon himself stand accused of fraud, unscrupulous profiteering, and tax evasion.
To get an idea of the scale of the damage, consider Binance’s once-stately LUNA investment.
2/ Binance received 15,000,000 LUNA (at peak worth $1.6 billion USD, now not much) as part of the original ($3m) invest. 560x return at peak. It still sits on the address we received at 👇. Never moved or sold.
— CZ 🔶 Binance (@cz_binance) May 16, 2022
Today the exchange’s total holdings are worth a little under $3,000.
This week, reports made the rounds that Kwon may have used his nonprofit organization, the LUNA Foundation Guard, to bail out whales by moving huge amounts of Bitcoin onto Binance and Gemini, and using it to purchase UST from them for close to face value ($1) at a time when UST was worth approximately $0.60 on secondary markets.
#Terra_Luna $UST $LUNA
It appears an inside job was allowed to be carried forth to bail out a whales all while the retail bag holders got incinerated. 🔥
Massive class-action / criminal proceedings possible with this. 👇https://t.co/M3OCNGxB0D pic.twitter.com/qP3XvNQQSd
— Paolo the Parrot 🦜 (@realPaulSantos) May 16, 2022
On Tuesday, Twitter user FatMan, who claims to be affiliated with Terra’s Research Forum, accused Kwon of having skimmed off the top of LUNA’s success by cashing out hundreds of millions of dollars “directly out of the LUNA market cap” over the last few years “to pay Terra’s employee salaries and operating expenses.”
🧵👇 Do Kwon and Terraform Labs defrauded the retail public of hundreds of millions of dollars *that they currently still have*. It came out of the pockets of LUNA & UST holders and went into their wallets.
Here’s why you should be mad, and here’s what you can do about it. 🧵👇
— FatMan (@FatManTerra) May 17, 2022
Later in the week, FatMan asked Kwon whether reports in the Korean press are true: Is Terra currently being hounded by South Korean tax authorities for $78 million? Kwon cleared the air.
We have no outstanding tax liabilities in Korea
The NTS did conduct a tax audit across all the major crypto cos with a presence in Korea and applied Korean tax code to foreign mother companies, and every company ended up paying as a result – we paid in full
Not unique to TFL
— Do Kwon 🌕 (@stablekwon) May 21, 2022
Kwon also said South Korean authorities “creatively charged millions from crypto companies” to recover from a pandemic-induced recession, and Terra complied to the last penny.
Understand why this would be interesting to look at for gossip but not sure if its relevant to anything thats going on
Korean govt needed money to shore up covid spending, creatively charged millions from crypto companies, and we paid our share in full – all there is to it
— Do Kwon 🌕 (@stablekwon) May 21, 2022
The Terra creator then fielded some pressing questions from the community, including why he’s not keen to follow the advice of many—including Binance CEO Changpeng Zhao—and burn through most of LUNA’s post-death spiral supply of 6.5 trillion basically worthless tokens.
Many accused Kwon of an elaborate rugpull after he stayed silent for two days at the height of Terra’s demise, but his slightly improved responsiveness and transparency since then appears to have won back FatMan on Saturday.
I see. Well, thank you for the explanation. I apologize if I misconstrued it, since I tend to take Cointelegraph as a fairly authoritative source. In the interest of accuracy I’ve shared your statement as well. And for the record, I completely believe you.
— FatMan (@FatManTerra) May 21, 2022
Still, the heat is on Kwon for a while. Doo Wan Nam, chief operating officer at blockchain research and investment firm StableNode, tweeted that South Korean Terra investors are now filing criminal and civil lawsuits against Kwon, alleging fraud.
$LUNA and $UST Korean investors have filed both civil and criminal lawsuit against Do for committing fraud. They also filed to order a provisional seizure (freeze) of his assets.
They are represented by legal firm LKB & Partners.
— Doo | StableNode @Lisbon (@DooWanNam) May 18, 2022
The consequences of Terra’s collapse also have had broader repercussions for the entire crypto industry. Now people want to know if other stablecoins, like Tether, are actually backed up to the last dollar. After all, it’s been disputed several times before.
With all due respect sir, when $USDT audit report?
We’re scared due to the $UST collapse and the market wants spot #Bitcoin ETFs.
Regulators, institutions, and crypto investors are waiting for your response on whether $75B worth of USDT is fully-backed or not.
— Ki Young Ju (@ki_young_ju) May 17, 2022
FTX CEO Sam Bankman-Fried believes that audits and oversight are the key to protecting consumers going forward.
100% agree–let’s bring audits with oversight to stablecoins, so we can protect consumers and give clarity to the industry. https://t.co/xBq3T6hTeI
— SBF (@SBF_FTX) May 17, 2022
Outside of the industry-wide Terra autopsy, a couple of other notable things happened on Crypto Twitter this week. For a start, Salvadoran dictator Nayib Bukele wants you to know his government is still bullish on Bitcoin. What Bukele neglects to mention is that he’s currently $34 million in the hole from his Bitcoin investment. Smile through the pain, Bukele!
Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country.
— Nayib Bukele (@nayibbukele) May 16, 2022
On Friday, someone tried to discredit World of Women NFTs by alleging that the collection’s PFP portraits are inspired by images of murdered women. The accuser’s “evidence” is dubious and essentially rests on an alleged and totally unproven romance between WoW project artist/founder Yam Karkai and sex cult leader Keith Raniere.
a horrible day in NFT land. if this is how we shall go down, i choose to accelerate
here is a thread proving @worldofwomennft is inspired from images of murdered women in their last days, with the artist @YKarkai directly associated with NXIVM cult leader Keith Raniere
— Coasey (@CoaseyX) May 20, 2022
Why would this person drag World of Women like that? An account named CryptoRock gave a plausible explanation.
This is a milady holder upset about the Coindesk article exposing people behind Miladys… So they’re saying if this is how we’re going down, I’m choosing to ‘accelerate’… I’m like 95% sure this is completely made up to try and poke fun at the Milady article.
— CryptoRock 🌏 (@CryptoMoonRock) May 20, 2022
Finally, those wanting to know the net worth of Ethereum creator Vitalik Buterin now have a tiny bit more clarity. He’s not a billionaire (anymore).
(btw btw I’m not a billionaire anymore)
— vitalik.eth (@VitalikButerin) May 20, 2022