New allegations are being made against Terra LUNA company founder Do Kwon. He allegedly deducted $2.7 billion before the crash. The coin is now sinking into the ground.
Those users who still believe in the coin are likely to be disappointed by now.
Twitter user FatManTerra accuses Terra Luna company founder Do Kwon claimed to have “stolen” a total of $ 2.7 billion. He was able to carry out this endeavor using Degenbox, the user claims. Do Kwon had succeeded in doing this by exchanging about 2 billion LUNA tokens for US dollars via detours in the market.
The complex procedure was necessary so that the stablecoin does not lose its connection to the US dollar. As a first step, he exchanged his Luna for UST, the stablecoin Lunas.
🧵 Some of you thought $80m per month was bad. That’s nothing. Here’s how Do Kwon cashed out $2.7 trillion (33 x $80m!) over the span of mere months thanks to Degenbox: the perfect mechanism to drain liquidity out of the LUNA & UST system and into hard money like USDT. (1/13)
– FatMan (@FatManTerra) June 11, 2022
Degenbox is a lending exchange of the Abracadabra platform, on which users can safely borrow almost unlimited VAT in principle. The principle works in such a way that users deposit a security in order to be able to borrow VAT.
These VAT can be used to deposit them on Anchor Protocol for a 20 percent interest. As a result, investors receive the AUST token, which in turn can be deposited as collateral. The circle starts from the beginning.
FatManTerra argues that this process has created the foundations for high liquidity in a specific liquidity pool. Since thousands of influencers suggested this strategy to their audience, the liquidity in the MIM-UST pool increased immeasurably. MIM is the stablecoin of the company Abracadabra.
Source: Dune.com
2.7 Billion Luna just paid off? Do Kwon gave up to keep the coin
With this liquidity behind him, it was no longer too difficult for Do Kwon to exchange 2.7 billion UST for MIM. He eventually switched this MIM to USDC and USDT. Those centralized stablecoins that Kwon had always warned about. Touche!
“$ 558 million went to KuCoin, $1.08 million to Binance and $ 545 million to Huobi. Ultimately, the money represents liquidity, which goes to the Terra ecosystem.”
FatManTerra does not claim that Do Kwon caused the crash. He only explains that more liquidity could have possibly prevented the crash. In addition, Do Kwon always claimed to hold his Luna coin and never wanted to sell it. He himself denies the allegations:
1/ This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false
– Thu Kwon 🌕 (@stablekwon) June 12, 2022
Terra Crash Shows: Stablecoins Are Not Always So Safe
We asked the expert Danny Chong, founder of Tranchess, what a perfect stablecoin must look like. On the question of whether this must be algorithmically or 100% collateralized, he explained to us as follows:
“I believe both types of stablecoins can work. For example, partial coverage may well succeed. But if we look at USDC – this one has a coverage of 100%, which makes perfect sense in this bear market.”
Fidelity and JPMorgan have recently invested in USDC, which gives the coin a strong and good hedge. ”This stablecoin will never collapse, because these institutions are always stable,” says Danny. At the current market situation, a fully covered USDC would make the most sense.
Meanwhile, FatManTerra points out problems with the USDD, the stablecoin Trons.
Has the USDD burnt (locked) collateral been hard coded to display a fully backed USDD supply despite the TRX price falling?
USDD supply: $723.3m
Coincidentally, a pricing bug shows the ‘burnt’ collateral to be worth exactly $723.3m even though it’s worth $624.2m. pic.twitter.com/lTCW4Za5lZ– FatMan (@FatManTerra) June 13, 2022
The market capitalization of USDD is 723 million US dollars – for this, the corresponding sum TRX was born (that is, deposited as a cover). But since the TRX price has fallen, this sum can no longer correspond to the market capitalization. Dhe user claims that Tron simply adjusted the numbers so that it does not stand out.
The stablecoin USDD has made headlines for its sensible approach after the collapse of the UST. Founder Justin Sun justifies the success of the USDD by saying that the blockchain would grow organically. He sees the disintegration of Terra mainly caused by the rapid scaling.
The Luna Coin is worth $ 2.39. If this development continues, there won’t be much left of Terra Luna 2.0.
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