Do Kwon Denies Cashing Out: 'I Lost Much of What I Had Too'

Disgraced Terraform Labs founder Do Kwon denied on Saturday that he “cashed out” of his company’s ecosystem in the days leading up to its meltdown, calling claims to that effect “categorically false.”

“This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false,” the 30-year-old South Korean tech titan wrote on Twitter. “Two contradictory claims seem to exist where: 1. Do’s wallets are doxxed, and he still owns most of his LUNA through the airdrop 2. Do dumped all his tokens to make billions.”

South Korean media outlets Naver and JTBC reported on Friday that the U.S. Securities and Exchange Commission found Kwon had cashed out $80 million month to dozens of wallets for several months leading up to the collapse of his tokens, classifying the payments as “operating expenses.”

Following up on that report, Twitter’s “FatMan” — an account that provides on-chain research about Terraform — published data illustrating a claim that Kwon cashed out as much as $2.7 billion with the help of lending protocols, including Abracadabra’s “Degenbox” and his own company’s Anchor, that allowed him to re-invest UST on his platform in exchange for cash.

Here’s the total amount of MIM Do Kwon was able to cash out through the MIM/UST pool – without even moving the peg! $2,719,132,772.01, to do with what he pleases. No need to dump LUNA or sell UST on exchanges – he drummed up liquidity from all of you. (7/13) pic.twitter.com/vRVve3WRsj

— FatMan (@FatManTerra) June 11, 2022

Terraform’s stablecoin, Terra USD (UST), de-pegged from the U.S. dollar in May. The company’s cryptocurrency, LUNA, which was used as a mechanism for maintaining the peg, crashed by more than 99 percent as a result, leading some investors to commit suicide.

“To reiterate, for the last two years the only thing I’ve earned is a nominal cash salary from TFL,” Kwon wrote in Saturday’s Twitter thread, referring to his Singapore-based company. “And deferred taking most of my founder’s tokens because a) didn’t need it and b) didn’t want to cause unnecessary finger pointing of ‘he has too much.’ Hope that’s clear — I didn’t say much because I don’t want to seem like playing victim, but I lost most of what I had in the crash too.

“I’ve said this multiple times but I really don’t care about money much,” Kwon added.

The decision may have contributed to the collapse of Terraform’s projects by removing liquidity from order books, making it more difficult for UST to maintain its value in the face of massive withdrawals that overwhelmed its peg and resulted in its value plummeting compared to the U.S. dollar. The token — which Terraform retired after the incident — stood at less than a penny as of Sunday.

UST held a market capitalization of more than $18 billion at its peak, while LUNA stood at $41 billion, for a combined total of $60 billion.

The South Korean news agencies said Terraform employees relayed information about the withdrawals to the SEC, indicating it was not a deeply held secret within the company. The outlets claimed the SEC was investigating the matter as a case of potential money laundering.

The SEC is investigating Kwon and his company both for issues related to the collapse of their projects and over their Mirror Protocol, a program intended to emulate the price of equities including U.S. stocks using “synthetic assets.”