Terraform Labs co-founder Do Kwon is disputing the significance of recently exposed Slack messages that were presented as evidence against him. The messages involved a conversation between Kwon and co-founder Daniel Shin, discussing tactics to attract investors by manipulating transactions for their payments provider company, Chai Corporation. According to the leaked messages, Kwon proposed creating fake transactions to make their platform more appealing to investors, with the intention of gradually phasing them out as Chai grew. Kwon’s legal team claims that the evidence was taken out of context and that the conversation actually referred to staking tokens with validators, not counterfeiting transactions.
The United States Securities and Exchange Commission (SEC) included the Slack conversation as evidence in a court filing from September 2019. The messages reveal Kwon’s plans to generate fees through fake transactions and keep the scheme confidential. However, he also expressed confidence that it would be difficult for investors to uncover their manipulation tactics. Kwon’s lawyers refute the evidence, stating that the SEC misrepresents the context and misstates evidence to support its claims. They argue that the conversation was about staking tokens, not creating counterfeit transactions.
Meanwhile, Kwon’s legal team is pushing for a U.S. federal court to reject the SEC’s request to extradite him to the U.S. over the collapse of the Terra ecosystem. They claim that this request is impossible as Kwon is currently detained in Montenegro with no scheduled release date. It is worth noting that Kwon has previously been found guilty of passport fraud.