Do Kwon denies freshly withdrawing of Terra ecosystem via Degenbox

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Do Kwon was recently accused of withdrawing $80 million a month from the Terra ecosystem leading up to the crash — fresh ecosystem claim this happened more than 33 times, and a staggering $2.7 billion was taken out of the system through Degenbox by Abracadabra Money.

Do Kwon has publicly denied the false calling them “categorically,” after making his Twitter account public again.

The Allegations

According to the and Do Kwon used a staking loop that allows extreme levels of leveraging to withdraw the money as described by FatManTerra:

“You can stake collateral to buy UST, put it into Anchor, then use your aUST to borrow more UST, put it into Anchor again… You get the drill. It’s Anchor on steroids.”

The staking loop is also employed by other derivative tokens such as stETH, These advanced yield strategies offer insanely high rewards but create extremely volatile investments with ever-increasing liquidation risks. FatManTerra alleges that Do Kwon undertook such a strategy and thus gambled with the future of Terra for his own personal gain.

FatManTerra questioned how Do Kown could have sold the $80 million tranches of tokens he acquired without crashing the price of either $LUNA or $UST since there is a lack of liquidity to absorb the selling pressure.

However, FatManTerra claimed that Degenbox’s popularity had built up enough “near-immovable liquidity” that allowed Do Kwon to convert billions of $UST for $MIM.

Do Kwon then allegedly sold the $MIM tokens for $USDC and $USDT.

Do Kwon once claimed,

“If you keep on using centralized, stable coins eventually they are going to rug you… so you might as well start using UST.”

It is highly unusual that Do Kwon, who has publicly stated that investors should only trust decentralized stablecoins such as $UST, would purchase either $USDC or $USDT.

The below image shows the value of $MIM tokens that were converted into centralized stablecoins. These tokens were then sent to exchanges such as Binance, KuCoin, and Huobi to cash out.

do kwon usdt
Source: Twitter

The data was analyzed by @fozzydiablo and can be viewed on Dune, FatManTerra allows for the benefit of the doubt and accepts that some of the money could theoretically have gone to Luna Foundation Guard. He ended his thread with a demand for “proper transparency and accountability.”

Do Kwon’s public response

CryptoSlate reached out to Do Kwon directly for clarification on the reason, but he declined to comment and shared an email address for Terraform Labs’ comms team instead.

Do Kwon posted a public denial on Twitter.

He said people are making contradictory regarding his holdings and spreading “falsehood,” which only “adds to the pain of everyone who has lost.”

Do Kwon clarified that his only income in the last two years has been a nominal cash salary from TFL and that he chose to defer taking his founder’s tokens to avoid “unnecessary finger pointing.”

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