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This Week on Crypto Twitter: Terra Conspiracy Theories Swirl as All Eyes Turn to Do Kwon

After Terra’s historic collapse, many accused Do Kwon of foul play. He’s stood his ground this week and won back some support.

4 min read
Terra's native cryptocurrency is called LUNA. Image: Shutterstock
Illustration by Mitchell Preffer for Decrypt

Crypto fans, fear not. The worst is over. After seven long weeks of declines, prices finally stopped falling. Though how long that will hold is anyone’s guess. 

Over on Crypto Twitter this week, Terra CEO Do Kwon stood in the dock as conspiracy theories were hurled at him and the entities he acted under during Terra's historic collapse. Terraform Labs, the Luna Foundation Guard, and ultimately Kwon himself stand accused of fraud, unscrupulous profiteering, and tax evasion. 

To get an idea of the scale of the damage, consider Binance’s once-stately LUNA investment.

Today the exchange’s total holdings are worth a little under $3,000. 

This week, reports made the rounds that Kwon may have used his nonprofit organization, the LUNA Foundation Guard, to bail out whales by moving huge amounts of Bitcoin onto Binance and Gemini, and using it to purchase UST from them for close to face value ($1) at a time when UST was worth approximately $0.60 on secondary markets.

On Tuesday, Twitter user FatMan, who claims to be affiliated with Terra’s Research Forum, accused Kwon of having skimmed off the top of LUNA’s success by cashing out hundreds of millions of dollars “directly out of the LUNA market cap” over the last few years “to pay Terra’s employee salaries and operating expenses.”

Later in the week, FatMan asked Kwon whether reports in the Korean press are true: Is Terra currently being hounded by South Korean tax authorities for $78 million? Kwon cleared the air.

Kwon also said South Korean authorities “creatively charged millions from crypto companies” to recover from a pandemic-induced recession, and Terra complied to the last penny.

The Terra creator then fielded some pressing questions from the community, including why he’s not keen to follow the advice of many—including Binance CEO Changpeng Zhao—and burn through most of LUNA’s post-death spiral supply of 6.5 trillion basically worthless tokens.

Many accused Kwon of an elaborate rugpull after he stayed silent for two days at the height of Terra’s demise, but his slightly improved responsiveness and transparency since then appears to have won back FatMan on Saturday.

Still, the heat is on Kwon for a while. Doo Wan Nam, chief operating officer at blockchain research and investment firm StableNode, tweeted that South Korean Terra investors are now filing criminal and civil lawsuits against Kwon, alleging fraud.

The consequences of Terra’s collapse also have had broader repercussions for the entire crypto industry. Now people want to know if other stablecoins, like Tether, are actually backed up to the last dollar. After all, it’s been disputed several times before.

FTX CEO Sam Bankman-Fried believes that audits and oversight are the key to protecting consumers going forward.

Elsewhere

Outside of the industry-wide Terra autopsy, a couple of other notable things happened on Crypto Twitter this week. For a start, Salvadoran dictator Nayib Bukele wants you to know his government is still bullish on Bitcoin. What Bukele neglects to mention is that he’s currently $34 million in the hole from his Bitcoin investment. Smile through the pain, Bukele!

On Friday, someone tried to discredit World of Women NFTs by alleging that the collection’s PFP portraits are inspired by images of murdered women. The accuser's “evidence” is dubious and essentially rests on an alleged and totally unproven romance between WoW project artist/founder Yam Karkai and sex cult leader Keith Raniere.

Why would this person drag World of Women like that? An account named CryptoRock gave a plausible explanation.

Finally, those wanting to know the net worth of Ethereum creator Vitalik Buterin now have a tiny bit more clarity. He’s not a billionaire (anymore).

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