An SEC court filing reveals leaked chats Daoquanfounder of the 2022-collapse Terra blockchain, and Co-Founder Daniel ShinCEO of Chai payment app.
A chat between the two co-founders
September 22, 2023, Court Archive A chat between Do Kwon and payment app Chai founder Daniel Shin has been made public. Conversations between the two founders date back to 2019.
Documents show that Do Kwon and Shin allegedly planned to create fake transactions to collect fees during the development of the project and help support their activities.
“I can create fake transactions that look real… which incurs fees… As Chai grows, we can gradually reduce this fee.” Do Kwon responded to questions about when participants will start participating in staking and when token airdrops will happen He said this to Shin at the end of the question.
Shin was worried about Do Kwon’s suggestion, asking, “What if people find out it’s fake?” Do Kwon responded, “To all the people who can prove it’s fake… because I will Try to make it as illegible as possible. I won’t tell you if you don’t want to.”
Nonetheless, after a series of text messages, Daniel Shin agreed with Do Kwon’s suggestion and asked them to conduct smaller tests in the meantime, which Do Kwon agreed to.
The U.S. Securities and Exchange Commission (SEC) stated in the filing that Terrain Lab In 2019, it partnered with payment application Chai, which can settle transactions on-chain.
Meanwhile, Chai payments were being made the traditional way, with executives generating fake Chai payments on the Terraform blockchain to make it appear as if the payments were made on the blockchain to deceive investors.
According to the SEC, investors purchased hundreds of millions of LUNA and other tokens because they believed the underlying Chai transactions were conducted on the Terra blockchain.
So far, the U.S. Securities and Exchange Commission (SEC) Request that Do Kwon be extradited from Montenegro to the United States if possible There he was arrested and jailed for forging travel documents.
Lawyers for the defendants objected to the SEC’s request, saying it was impossible to allow Do Kwon to leave Montenegro. Therefore, the attorneys asked the court to deny the SEC’s request, arguing that if granted, it would prevent Terraform Labs from submitting Do Kwon’s declaration during the summary judgment process.
The relationship between Terraform Labs and Chai didn’t last long, ending back in 2020. However, the SEC determined that the relationship lasted long enough to effectively carry out this deceptive scheme.
Terraform Labs partners with Chai
Terraform Labs partnered with Chai in 2019 to accelerate payments on Terra.Blockchain Announce Its partnership with Chai on Medium states that it will rebuild the payments stack on the Terra blockchain to simplify legacy payment systems and offer transaction fees to merchants at a discounted rate.
Another reason why Terraform Labs is partnering with Chai Integrating Terra’s Korean won-pegged stablecoin KRT into payment applications.
However, when Shin established Chai Corporation in 2020, the two parties severed ties. Along with this development, Chai has been operating independently.
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