U.S. SEC court documents: Have obtained chat records related to Do Kwon's "faked trading volume" and issued charges

ChainCatcher news, Decrypt reports that according to court documents from the SEC, Do Kwon has (almost) admitted to engaging in the act of faking trading volumes. The SEC documents show text messages between Do Kwon and Daniel Chin, the founder of the payment application Chai (also a co-founder of Terraform), with the following quotes:

Do Kwon: "I can create fake trades that look real, which will incur costs."

Daniel Chin: "What if people find out it's fake?"

Do Kwon: "If you’re not willing to, I won’t tell you."

It is reported that in 2019, Terra announced a partnership with Chai, stating in a blog post that the collaboration aimed to rebuild the payment stack on the blockchain to simplify legacy payment systems and offer discounted transaction fees to merchants. This partnership would lead to the Terra network processing "millions or even billions of transactions."

The SEC wrote in the complaint that Chai payments did not use the Terraform blockchain to process and settle payments. Instead, the defendants deceptively copied Chai payments onto the Terraform blockchain to make them appear as if they occurred on the Terraform blockchain, while in fact, Chai payments were made through traditional means. In the early stages of the partnership between Chai and Terraform, Kwon and Daniel Shin had a private conversation where Do Kwon detailed how he intended to use Chai to create fake transactions on the Terra blockchain that looked real and incurred costs.