Terraform Labs co-founder Do Kwon has contested the significance of exposed Slack messages presented as evidence. The chat involved a discussion with his co-founder, Daniel Shin, about manipulating transactions to attract investors.
The United States Securities and Exchange Commission (SEC) included the Slack conversation between the two co-founders, dated back to September 2019, in a recent court filing.
The message report indicates that Kwon and Shin were actively brainstorming tactics to increase investor interest in Seoul-based payments provider Chai Corporation.
Chai was founded by Kwon and Shin in mid-2019 and shared offices and staff with Terraform until the two firms split in 2020.
According to the leaked message exchange, Kwon intended to shape transactions to make it more attractive to investors:
“I can just create fake transactions that look real.”
Kwon further elaborates that these transactions will generate fees and can be gradually phased out as Chai grows.
He then appears to attempt to make a pact with Shin to keep the plan confidential. “I wont tell if you wont,” Kwon stated.
He further asserted that it will be challenging for investors to uncover the manipulation tactics.
“All the power to those that can prove its fake,” he states, adding that he will be making every effort to prevent the scheme being exposed:
“Because I will try my best to make it indiscernable.”
However, Kwon refutes the evidence against him, alleging it was taken out of context.
His legal team claims that Kwon and Shin spoke about the possibility of staking LUNA tokens with validators rather than creating counterfeit Chai transactions:
“Finally, the SEC misstates evidence in its gratuitous effort to prejudice Mr. Kwon in a procedural motion having nothing to do with the merits (or lack of merit) of the SEC’s case.”
“In other words, the SEC’s motion relies on misrepresentations about irrelevant evidence to support its spurious claim that it has been unable to get discovery from Mr. Kwon,” Kwon’s lawyers added.
Related: Do Kwon converted illicit funds from LUNA to Bitcoin: S.Korean prosecutors
Meanwhile, Kwon’s lawyers are pushing the US federal court to reject the SEC’s request to extradite him to the US over the collapse of the Terra ecosystem.
His legal team stated that the request is “impossible” due to him being detained in Montenegro with no scheduled release date. This follows Kwon being found guilty of passport fraud.
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