Disgraced Crypto Mogul Admits to Faking Trading Volume
Court documents from the U.S. Securities and Exchange Commission (SEC) reveal that Do Kwon, a disgraced crypto mogul, has admitted to faking trading volume. In a text message exchange with Daniel Chin, the founder of payments app Chai, Kwon confesses to creating fake transactions that appear real in order to generate fees.
Terra’s Collapse and Fraud Accusations
Last year, Terra, which had partnered with Chai to accelerate payments, collapsed. The SEC is now accusing Kwon of fraud, alleging that the partnership did not deliver what was promised to users and that Terra never replaced Chai’s payment systems. This is significant considering that Daniel Shin, the founder of Chai, also co-founded Terraform with Kwon in 2018.
The Deceptive Partnership
In 2019, Terra announced its partnership with Chai, stating that it would rebuild the payments stack on the blockchain and provide transaction fees at a discounted rate to merchants. However, according to the SEC’s complaint, Chai payments were not processed on the Terraform blockchain as advertised. Instead, they were deceptively replicated on the blockchain to create the appearance of using blockchain technology.
New Revelations from SEC Filing
The SEC’s recent filing provides further insight into the relationship between Terraform and Chai. It includes private chat conversations between Kwon and Shin, where Kwon explains his intention to use Chai to generate fake transactions on the Terra blockchain for fees. These revelations shed light on the fraudulent activities carried out by Kwon.
Terra’s Downfall and Legal Troubles
Terra was once a popular DeFi blockchain ecosystem and the second-largest after Ethereum. Its native cryptocurrency, LUNA, had a high market cap. However, in May 2022, Terra collapsed, leading to a bear market and bankruptcy for many crypto projects associated with it. Kwon now faces numerous charges from American and South Korean authorities, including document forgery. He has been detained indefinitely in jail and is fighting against extradition to the U.S.
Hot Take: Do Kwon’s Admission Exposes Deception in Crypto Industry
The admission by Do Kwon regarding faking trading volume reveals the deceptive practices that can exist within the crypto industry. This case highlights the importance of transparency and accountability in order to maintain trust among users and investors. The SEC’s filing provides damning evidence against Kwon and serves as a reminder of the regulatory scrutiny faced by those involved in fraudulent activities. As the crypto industry continues to evolve, it is crucial for individuals and companies to uphold ethical standards and ensure that their actions align with their promises.
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