Co-founder Do Kwon Contests Slack Messages in SEC Case

Do Kwon, co-founder of Terraform Labs, has contested the significance of exposed Slack messages offered as evidence. Daniel Shin, the co-founder, and I discussed manipulating transactions to attract investors.

In a recent court filing from September 2019, the United States Securities and Exchange Commission (SEC) included a September 2019 Slack conversation between the company’s co-founders.

Slack message report between Do Kwon and Daniel Shin. Source: Docdroid

The message report indicates that Kwon and Shin were actively considering strategies to increase investor interest in Chai Corporation, a Seoul-based payments provider.

“I can just create fake transactions that look real.”

Kwon and Shin founded Chai in the middle of 2019; the two businesses co-shared space and staff up until 2020, when they split.

According to the leaked message exchange, Kwon intended to create fake transactions to make them more attractive to investors. Kwon further elaborates that the transactions will produce fees and can be gradually phased out as Chai grows.

Slack conversation between Do Kwon and Daniel Shin on 5/9/2019. Source: Docdroid

He then attempts to establish a confidentiality agreement with Shin. “I won’t tell if you won’t,” asserted Kwon. He added that it will be difficult for investors to uncover the manipulation techniques.

“All power to those who can prove it’s a hoax,” he says, adding that he will make every effort to prevent the scheme’s exposure. Kwon, however, disputes the evidence against him, claiming that it was taken out of context.

His legal team asserts that Kwon and Shin discussed the possibility of staking LUNA tokens with validators as opposed to creating counterfeit Chai transactions.

“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 attorneys added.

Meanwhile, Kwon’s lawyers are pushing a U.S. federal court to deny the SEC’s request to extradite him to the U.S. over the collapse of the Terra ecosystem.

“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.”

His legal team deemed the request “impossible” because he was detained in Montenegro without a scheduled release date. This follows Kwon’s conviction for passport forgery.