Do Kwon dismisses Slack chat records as irrelevant evidence

September 30, 2023 Coin Telegraph

Slack conversations between Terraform Labs' co-founders Do Kwon and Daniel Shin have exposed their contemplation of orchestrating fraudulent transactions on the Terra blockchain.

Terraform Labs co-founder Do Kwon has refuted the significance of Slack messages as evidence, which involved discussions with his co-founder Daniel Shin about manipulating transactions on the Terra blockchain to attract investors.

The United States Securities and Exchange Commission (SEC) included the Slack conversation between the two co-founders, which was dated back to September 2019, in a recent court filing.

*Slack message report between Do Kwon and Daniel Shin. Source: Docdroid*

The message report suggests the two co-founders were brainstorming strategies to increase investor interest in the Terra blockchain. However, Kwon intended to shape transactions to make them more attractive:

“I can just create fake transactions that look real.”

Kwon further elaborates that these transactions will generate fees and can be gradually phased out as Chai (XCH) grows.

Kwon then appears to attempt to make a pact with Shin to keep the plan confidential. "I wont tell if you wont," he stated.

He further asserted that it will be challenging for individuals to uncover the manipulation tactics.

“All the power to those that can prove its fake,” he states, adding that he will be making every effort to prevent the scheme being exposed:

“Because I will try my best to make it indiscernable.”

*Slack conversation between Do Kwon and Daniel Shin on 5/9/2019. Source: Docdroid*

However, Kwon refutes the evidence against him, alleging it was taken out of context.

His legal team claim that Kwon and Shin spoke about the possibility of staking LUNA tokens with validators, rather than creating counterfeit Chai transactions:

“Finally, the SEC misstates evidence in its gratuitous effort to prejudice Mr. Kwon in a procedural motion having nothing to do with the merits (or lack of merit) of the SEC’s case.”

“In other words, the SEC’s motion relies on misrepresentations about irrelevant evidence to support its spurious claim that it has been unable to get discovery from Mr. Kwon,” Kwon's lawyers added.

Meanwhile, Kwon's lawyers are pushing a US federal court to reject the SEC's request to extradite him to the US over the collapse of the Terra ecosystem.

Kwon's legal team declared the request as "impossible" due to him being detained in Montenegro with no scheduled release date after being found guilty of passport fraud.

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SEC Granted Permission To Go After Do Kwon’s Close Associate in Korea

August 22, 2023 The Daily Hodl

SEC seeks to question Terraform Labs co-founder Daniel Shin in Korea

August 18, 2023 Coin Telegraph

CHAI

The SEC seeks to question Daniel Shin on Do Kwon and Chai Corporation’s relationship with Terraform Labs.

The United States Securities and Exchange Commission has been granted a motion to seek assistance from South Korea to question Terraform Labs co-founder Daniel Shin — as it builds its case against the firm and co-founder Do Kwon.

On Aug. 16, District Judge Jed Rakoff granted the SEC’s July 10 motion asking if it could seek to question the Terra co-founder, along with requesting documents from the Seoul-based payments provider Chai Corporation he founded.

In its July filing the SEC said it wishes to question Shin on Kwon’s role at Chai, how Chai used the Terra blockchain and Chai’s disclosures about its relationship with Terraform.

It also wants to know why Chai separated from Terraform. Chai was founded by Shin and Kwon in mid-2019 and shared offices and staff with Terraform until the two firms split in 2020.

*Excerpt of some of the questions the SEC seeks to ask Shin. Source: CourtListener*

Terraform Labs and Kwon didn’t oppose the SEC’s motion and included their own questions and document requests — they have previously denied the SEC’s allegations.

The SEC sued Terraform and Kwon in February alleging its now-collapsed cryptocurrencies TerraClassicUSD (USTC) and Terra Luna Classic (LUNC) — formerly Terra (LUNA) and TerraUSD (UST) — were fraudulent.

It also alleged Kwon and Terraform falsely touted that Chai used the Terra blockchain to process and settle transactions.

The SEC claimed Terraform and Kwon faked transactions of its Korean won pegged stablecoin TerraKRW (KRT) to give the impression that Chai was using the blockchain.

Terra’s interconnected crypto ecosystem collapsed in May 2022 wiping out around $40 billion in value, bringing the rest of the crypto market with it.

In April, South Korean prosecutors hit Shin with multiple fraud charges alleging he hid the risks of investing in Terraform’s cryptocurrencies.

Kwon is currently in Montenegro serving a four-month prison stint for trying to leave the country using a fake Costa Rican passport.

Along with the SEC’s suit, Kwon also faces criminal charges in the U.S. and South Korea — both countries have requested his extradition.

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Daniel Shin