The collapse of Luna and UST has overshadowed Do Kwon, its founder, with many allegations. It’s difficult to say whether they are true or not; however, the founder has dismissed the claims. There are rumors that Do Kwon allegedly liquidated $2.7B from the Luna ecosystem in 3 years. This means approximately $80 million was being liquidated every month. The allegation also says that the funds were used to purchase USDT and USDC just before the crash.
Do Kwon allegedly liquidated $2.7B from Luna
Here is the thread about Do Kwon taking out $80 million worth of liquidity every month from Luna’s ecosystem for 3 years. Let’s take a look at what he has to say.
🧵 Some of you thought $80m per month was bad. That's nothing. Here's how Do Kwon cashed out $2.7 billion (33 x $80m!) over the span of mere months thanks to Degenbox: the perfect mechanism to drain liquidity out of the LUNA & UST system and into hard money like USDT. (1/13)
— FatMan (@FatManTerra) June 11, 2022
In simple words, Do Kwon used a borrowing protocol called Abracadabra’s Degenbox to turn his UST into fiat without breaking the peg. The protocol allows users to stake collateral to buy UST; then, the UST can be put in the Anchor protocol and used to buy more UST. It’s a whole loop that continues on. Do Kwon did this for around $2.7 billion without breaking the peg and selling anything on exchanges. He was squeezing the liquidity with leverage and then swapped the same for USDT and USDC.
1/ This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false
— Do Kwon 🌕 (@stablekwon) June 12, 2022
Do Kwon obviously didn’t agree with all this and said that all he took in the past years was a form of cash salary. He even didn’t take most of his founder’s tokens so no one says that he has too much. He also claimed that the allegation of him cashing out $2.7B is false. Do Kwon also said that he lost most of what he had in the crash, but he didn’t talk about it much till now.
Anchor’s developer on the crash
After the UST and Luna crash, many claimed that one of the reasons was the unrealistic high-interest rates that the Anchor protocol gave. But now, that point has been confirmed by Mr. B, a developer of Anchor protocol. He said that Do Kwon was warned that their protocol was designed to offer interest rates up to 3.6%, but it was increased to 20% before the release. Mr. B knew that the collapse would happen, and it did. His request to lower interest rates was refused by Do Kwon.
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