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How Terra VIPs Took Massive Profits From Farming Rewards Through Insider Trading While Others Lost Money

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Do Kwon Caught In Yet Another Scandal Of Insider Trading While Everyone Else Lost Money.

The social and legal terrain is getting rougher for Do Kwon and his team at Terra. There have been multiple scandals exposed in recent days with the Terra Luna founder at the center of all of them. Now, another one has come up, and this one is even crazier and might fuel more community anger against Terra.

It turns out that during the Luna and UST crash, while everyone else was burning in pain of seeing their investments go up in smoke, Do Kwon and a group of VIP Terra validators were busy scheming on how to make themselves filthy rich. The scheme has been exposed by FatMan in a lengthy Twitter thread.


UST-LUNA Tokenomics Explained

First off, according to the original Whitepaper, Terra Luna’s basic tokenomics state that a user can redeem 1 UST for an equivalent $1 worth of Luna. The vice versa applies the same way. During a UST de-peg, as it happened in this case, UST would be converted into Luna at a very high rate until the UST is pegged again.

If de-peg isn’t restored, Luna would crash hard towards zero value. This is exactly what appears to have happened in the recent UST and Luna crash.

However, while the crypto crashed, Do Kwon and his VIP group of validators were swapping large amounts of UST into Luna.

Validators Disabled The Market Module And Staked

Apparently, the group planned to change the base tokenomics of the crypto and reap big when it eventually reversed course and recovered.

They also restricted access to staking, meaning that the rest of the Terra community was totally in the dark and couldn’t stake.

“Behind the scenes, a closed group of validators were deciding on a course to change LUNA’s fate. They were going to radically change LUNA’s core tokenomics by disabling the market module to prevent a governance attack, and would stake large amounts of LUNA themselves.”

In his tweets, FatMan estimates that this group of insider traders stands to reap profits to the tune of over 60,000% APR from LUNC (the newly renamed Luna Classic). The APY is around 700,000%.

As is evident from the comments, the community isn’t happy about this. As a matter of fact, these allegations could spark yet another investigation against Kwon and Terraform Labs. This time around, the involved Terra validators could also be subjects of investigations.

Currently, the South Korean government is investigating the collapse of Luna, and this new information, if proven to be true, could be used by the authorities.

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The content is for informational purposes only and may include the author’s personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

Albert Brown
Albert Brown is a cryptocurrency investor and journalist who has been in the nascent space since 2017. His love and passion for technological innovations made him delve deeper into the world of blockchain and cryptocurrencies. As a journalist, Brown has written on several crypto-related topics that have been referenced by popular industry players like Tyler Winklevoss, Binance CZ, etc.



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