Do Kwon, co-founder of Terraform Labs, has cast doubt on the significance of exposed Slack messages presented as evidence. These conversations, dating back to September 2019, involve discussions between Kwon and co-founder Daniel Shin about potentially manipulating transactions to attract investors.
The U.S. Securities and Exchange Commission (SEC) included these Slack conversations in a recent court filing. The messages suggest that Kwon and Shin were brainstorming ways to generate more investor interest in Chai Corporation, a Seoul-based payments provider founded by Kwon and Shin in mid-2019. It's worth noting that Chai shared offices and staff with Terraform until their separation in 2020.
In the leaked messages, Kwon discussed the idea of creating fake transactions to make Chai appear more appealing to investors. He mentioned:
“I can create fake transactions that look real.”
Kwon explained that these transactions would involve fees and could be phased out as Chai grew. He also proposed keeping this plan secret from investors. However, he assured Shin that it would be difficult for investors to detect such manipulative tactics:
"All power goes to those who can prove it is false," he said, adding that he would do whatever it takes to prevent the plan from being exposed "Because I'll try to make it indistinguishable."
Kwon, however, has denied the allegations against him, claiming that the evidence was taken out of context. His legal team argues that Kwon and Shin were discussing the possibility of staking LUNA tokens to validators rather than creating fake Chai transactions. According to Kwon's lawyers, the SEC misrepresented irrelevant evidence in an attempt to prejudice their client in a procedural motion unrelated to the merits of the case.
Furthermore, Kwon's legal team is urging a U.S. federal court to reject the SEC's request to extradite him to the U.S. over the Terra ecosystem's collapse. They argue that this request is "impossible" because Kwon is currently detained in Montenegro with no scheduled release date. Kwon had previously been convicted of passport fraud.
