Do Kwon was recently accused of withdrawing $80 million a month from the Terra ecosystem leading up to the crash — fresh allegations claim this happened more than 33 times, and a staggering $2.7 billion was taken out of the system through Degenbox by Abracadabra Money.
Do Kwon has publicly denied the allegations, calling them “categorically false,” after making his Twitter account public again.
The Allegations
According to the allegations, Do Kwon used Abracadabra.money and a staking loop that allows extreme levels of leveraging to withdraw the money as described by FatManTerra:
“You can stake collateral to buy UST, put it into Anchor, then use your aUST to borrow more UST, put it into Anchor again… You get the drill. It’s Anchor on steroids.”
The staking loop is also employed by other derivative tokens such as stETH. These advanced yield strategies offer insanely high rewards but create extremely volatile investments with ever-increasing liquidation risks. FatManTerra alleges that Do Kwon undertook such a strategy and thus gambled with the future of Terra for his own personal gain.
FatManTerra questioned how Do Kown could have sold the $80 million tranches of tokens he acquired without crashing the price of either $LUNA or $UST since there is a lack of liquidity to absorb the selling pressure.
However, FatManTerra claimed that Degenbox’s popularity had built up enough “near-immovable liquidity” that allowed Do Kwon to convert billions of $UST for $MIM.
Here’s the total amount of MIM Do Kwon was able to cash out through the MIM/UST pool – without even moving the peg! $2,719,132,772.01, to do with what he pleases. No need to dump LUNA or sell UST on exchanges – he drummed up liquidity from all of you. (7/13) pic.twitter.com/vRVve3WRsj
— FatMan (@FatManTerra) June 11, 2022
Do Kwon then allegedly sold the $MIM tokens for $USDC and $USDT.
Do Kwon once claimed:
“If you keep on using centralized, stable coins eventually they are going to rug you… so you might as well start using UST.”
It is highly unusual that Do Kwon, who has publicly stated that investors should only trust decentralized stablecoins such as $UST, would purchase either $USDC or $USDT.
The below image shows the value of $MIM tokens that were converted into centralized stablecoins. These tokens were then sent to exchanges such as Binance, KuCoin, and Huobi to cash out.
The data was…
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