About a year ago, on March 14, 2022, cryptocurrency trader GiganticRebirth (GCR) invited Do Kwon, co-founder and then-CEO of Terraform Labs, to place a $10 million bet on Terra Luna (LUNC ) will reach a price lower than the current price of $92.4 per token.
The blockchain exec took to the offer for the second in this series. The day before, Kwon accepted a $1 million bet offered by crypto trader Algod that LUNC would drop below $88 per token on March 13, 2023. This resulted in $11 million worth of two bets and a $22 million prize pool. The $22 million is escrowed by blockchain personality Cobie on his Ethereum address. Cobie claimed at the time, “While I was in the middle of Africa, I gave participants a hot wallet on my phone, and when I woke up, $22 million had been deposited.”
As Cobie puts it, the blockchain personality paid off the stake shortly after the $40 billion LUNC and accompanying algorithmic stablecoin Terra USD (USTC) ecosystem collapsed, with LUNC trading near zero. However, Cobie also stated in December 2022: “In fact, I paid off my bet shortly after Luna dropped to 0, and then bought enough Luna to hedge in case it somehow went back to $88. But I lost my hedge (hosted in FTX ), so if Luna goes up to $88 in the next 3 months, I'm screwed"
Since the staking runs until mid-March 2023, Cobie will still need to hold collateral despite the LUNC collapse, as funds have been paid upfront and conditions may vary at settlement. At the time of publication, LUNC is trading at $0.000124 per token.
Last November, FTX, the world’s third-largest cryptocurrency exchange by trading volume at the time, filed for bankruptcy and froze the deposits of more than 1 million creditors amid allegations of misappropriation of user funds. On April 4, 2022, Cobie transferred the bonus and principal, $22 million worth of stablecoins, to FTX. The subsequent flow of funds tracked by the blockchain transaction is unclear.
On September 26, 2022, at the request of South Korean prosecutors, Interpol issued a red notice to Do Kwon for fraud allegations related to the Terra Luna collapse. The former blockchain executive is reportedly hiding in Serbia, which has no extradition agreement with South Korea. The FBI and DOJ reportedly began investigating the Terra Luna debacle on March 14, 2023. This comes a month after the SEC charged Terraform Labs and former CEO Do Kwon with "defrauding investors in a crypto scheme."
