A court filing by the SEC has revealed leaked chats between Do Kwon, founder of the collapsed Terra blockchain, and co-founder Daniel Shin, CEO of the Chai payment app.
Chat History Between The Two Co-founders
On September 22, 2023, a court filing unveiled the chat history between Do Kwon and Daniel Shin dating back to 2019. The filing disclosed their alleged plan to create fake transactions for fees during project development.
In response to a question about staking and token airdrops, Do Kwon suggested generating fake transactions to look real. When Shin expressed concern about people discovering the fakery, Do Kwon stated he would try to make it indiscernible.
Eventually, Shin agreed with Do Kwon’s suggestion and proposed testing it on a smaller scale. The SEC claimed that Terraform Labs partnered with Chai in 2019 to settle transactions on-chain.
However, executives generated false Chai payments on the Terraform blockchain to deceive investors into believing they were occurring on the blockchain. Investors bought tokens under this false pretense.
The SEC has requested Do Kwon’s extradition from Montenegro, where he was arrested for forging travel documents. His attorneys oppose this request, citing its impossibility. Terraform Labs and Chai ended their partnership in 2020.
Terraform Labs Partnership With Chai
In 2019, Terraform Labs partnered with Chai to accelerate Terra’s payment system. The partnership aimed to simplify legacy payment systems and offer discounted transaction fees to merchants on the Terra blockchain.
Terraform Labs also sought to incorporate Terra’s Korean won-pegged stablecoin (KRT) into the Chai payment app. However, both parties severed ties in 2020 when Shin established Chai Corporation, which has since operated independently.
Hot Take: SEC Filing Reveals Deceptive Practices by Terra and Chai Co-founders
A court filing by the SEC exposed a series of leaked chats between Do Kwon and Daniel Shin, shedding light on their alleged plan to create fake transactions for fees during the development of the Terra blockchain. The SEC claims that Terraform Labs and Chai partnered in 2019 to settle transactions on-chain. However, executives manipulated the system by generating false Chai payments on the Terraform blockchain, deceiving investors into believing they were genuine. This deceptive scheme led investors to purchase tokens based on false information. The SEC has requested Do Kwon’s extradition to the United States, but his attorneys argue it is impossible due to his current imprisonment in Montenegro for forging travel documents. The partnership between Terraform Labs and Chai ended in 2020.
By
By
By
By