FatManTerra has alleged that Terra co-founder Do Kwon cashed out $2.7 billion from Terra within months, using Degenbox to drain liquidity from the ecosystem.
In his latest Twitter blast, he revealed that the Terra co-founder used Degenbox to print $80 million monthly from the LUNA/UST system and converted it into hard money like USDT.
Degenbox is a borrowing protocol that loop stablecoin buys. Through it, people can stake collateral to buy UST, deposit it into anchor and then use the aUST to borrow more UST, repeating the process as often as they want.
Terra in more trouble?
According to the tweet, Terra influencers promoted Degenbox to many retail users who used it for its high yield. This ensured strong liquidity at the top of the peg zone, allowing “someone to cash out billions of UST for MIM at a 1:1 rate without disturbing the peg.”
He alleged that Kwon used this protocol to cash out roughly $2.7 billion through the MIM/UST pool, without affecting the peg of the UST.
Additionally, he shared screenshots showing Terraform Labs sent a total of $2.7 billion in USDT to three centralized exchanges – KuCoin, Binance, and Huobi. In FatMan’s opinion, all these funds were removed from Terra Ecosystem and contributed to its collapse.
Do Kwon denies allegations
However, Do Kwon has denied the allegations.
“This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false,” he said in a follow-up tweet.
Although he didn’t address the specific allegations in the new thread, he pointed out that there are now contradictory claims available to the public.
Here, he is referring to the earlier claim that he is yet to destroy his Luna tokens and participated in the recent airdrop.
According to him, the only thing he earned in the last two years was a nominal cash salary from TerraForm Labs, and he turned down most of his founder tokens.
I didn’t say much because I don’t want to seem like playing victim, but I lost most of what I had in the crash too,” he added.
Earlier this week, reports indicated that the SEC is probing Terraform Labs to examine whether the company violaed federal investor-protection regulations.
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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.