$3M LUNA Cashouts By Do Kwon May Have Caused UST Collapse

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• Reportedly, Terra founder Do Kwon unlocked 3 million LUNA for TLF back in 2021.
• The LUNA tokens were converted into UST by specialized bots.
• $300 million were dumped into MIM & curve pools under “operating costs.”

Terra research Twitter account FatMan posted about Terra Founder’s 2021 cash out, recently. As the news read, Do Kwon began unlocking 3 million LUNA tokens in 2021 for TLF.

In 2021, Do Kwon began unlocking 3M LUNA a month for TFL, promising transparency reports. These reports never came.Instead, the TFL wallet used specialized bots to convert their LUNA into UST and dump up to $300M a month into the MIM & Curve pools. "Operating costs." Good one. pic.twitter.com/fgece3XIHn

— FatMan (@FatManTerra) October 11, 2022

According to the screenshots attached in the post, 5 million LUNA were unlocked for Project Dawn in 2021 and was distributed by the TLF Genesis Wallet which had a market value of $150 million. However, TLF promised that the 3 million LUNA tokens unlocked for “operating costs” for Project Dawn will be backed by transparency reports providing clear details to the community.

Moreover, the cash out was supposed to facilitate expenditures including employee token distribution. Nevertheless, the guaranteed transparency reports were never delivered.

Another screenshot explained how Terra labs liquidated hundreds of millions of UST using the Abracadabra UST leverage farm. The user questions the need for $300 million to cover operating costs.

Secondly, the screenshot mentions how few bots were selling and burning Luna into UST to cash out such a big sum. Finally, when enough UST would be collected, TLF would bring the money to the Ethereum mainnet into a wallet with a specific address.

Furthermore, the document mentions that whenever popular DeFi protocols founder Daniele Sestagalli opened the Abracadabra leverage farm by another $100 million, users were selling newly minted MIM for more UST, further imbalancing the MIM-UST curve pool.

To reach the perfect UST-MIM curve pool 50/50 ratio, another bot would then sell UST with $100 million MIM in Sestagalli’s wallet. And finally, the MIM would be sold into the MIM-3pool at a favorable peg with USDT/DAI/USC stablecoins sent to different exchanges to be cashed out.

FatMan criticized Do Kwon saying that cashing out hundreds of millions and lying about the money’s purpose is not a victimless crime. He further suggested that the UST collapse back in May could’ve potentially been the result of these massive cashouts.

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