There were numerous unconfirmed allegations on Saturday that Kwon had taken liquidity out of Luna Classic (LUNC) and TerraUSD Classic (USTC), before the crash, to purchase USDT (USD pegged stablecoins).
Rumors surfaced after FatManTerra shared the alleged details of how Terra influencers and Kwon managed to drain funds while maintaining artificial liquidity.
According to Kwon, over the last two years he has only earned a dollar-denominated salary. He claimed he deferred taking most of the founder’s tokens out of a desire to avoid a conflict of interest.
Additionally, Kwon has now revealed that he lost most of his own money in the crash.
On Twitter, the cryptocurrency developer used to often call his critics ‘poor’. Now he says he doesn’t really care about money, prompting more ridicule.
An investigation by the SEC is opened
Investigations of the Terra Classic ecosystem collapse are underway in South Korea and the United States.
The Financial Times reports that South Korean authorities are investigating Terraform Labs over allegations of fraud. The U.S. Securities and Exchange Commission is investigating whether the marketing surrounding the UST stablecoin violated federal investor protection rules.
“SEC enforcement attorneys are looking into whether Terraform Labs, the firm behind the coin also known as UST, broke rules for securities and investment products.”
A virtual currency may fall under the SEC’s jurisdiction if U.S. citizens invest in it in order to benefit from the efforts of those operating it.
Binance praised LUNA and UST weeks before Terra Collapse
Binance, the largest cryptocurrency marketplace, lauded the LUNA Anchor program as an investment opportunity. As a result of its hype for the Yielding program, millions of users purchased the UST stablecoin, which later crashed.
Binance referred to the project as “safe and happy,” touting its 20% return on investment (ROI) as very profitable. Binance’s problem wasn’t that it promoted the UST stablecoin, but rather that the world’s largest exchange didn’t emphasize the crypto-related risks.
LUNA 2.0
The LUNA 2.0 airdrop occurred late May for users to recover their lost funds. Terraforms Labs called it the Phoenix. It was created to help restore the crashed TerraUSD (UST) and LUNA classic, but less than 14 days after it was deployed, the token also crashed.