Terraform Labs Co-Founder Denies Slack Messages Linking Him to Fraud on Terra Blockchain

Background

Terraform Labs co-founder, Do Kwon, has dismissed the significance of Slack messages presented as evidence by the United States Securities and Exchange Commission (SEC). The messages, exchanged between Kwon and his co-founder Daniel Shin in September 2019, allegedly discuss manipulating transactions on the Terra blockchain to attract investors.

Fraudulent Intentions?

The Slack conversation between Kwon and Shin, included in a recent court filing by the SEC, reveals discussions on strategies to increase investor interest. Kwon suggests creating fake transactions to enhance the image of the Terra blockchain. He claims that these transactions would generate fees and could be phased out as Chai, a blockchain-based mobile payment platform, grows.

A Secret Pact

In the Slack messages, Kwon attempts to make a pact with Shin to keep the plan confidential. "I won't tell if you won't," he states. Kwon also expresses confidence in preventing the scheme from being exposed, stating, "All the power to those that can prove it's fake." He further asserts that he will do his best to make the manipulation tactics indiscernible.

Refuting the Evidence

Despite the evidence presented, Kwon denies any wrongdoing and claims that the messages were taken out of context. His lawyers argue that the SEC misstates the evidence and makes irrelevant claims in an attempt to prejudice Kwon.

Alternative Explanation

Kwon's legal team asserts that the discussions between Kwon and Shin were not about creating counterfeit Chai transactions. Instead, they claim the conversations involved staking LUNA tokens with validators and facilitating transactions between LUNA wallets.

Legal Battle

Kwon's lawyers are currently pushing back against the SEC's request to extradite him to the US. They argue that it is impossible due to Kwon's detainment in Montenegro, where he has been found guilty of passport fraud with no scheduled release date.