Prominent entities implicated as whistleblowers lift lid on Terra scandal

Twitter user @FatManTerra dropped a bombshell on May 23, alleging that the events at Terra LUNA were a criminal act orchestrated by key industry figures and entities.

Previously, the dominant narrative had been one of misfortune and oversight regarding vulnerabilities in algorithmic stablecoins.

However, @FatManTerra claims whistleblowers have revealed “deeply troubling things,” invalidating the previous narrative.

In the past 48 hours I have been contacted by several whistleblowers. These people would like to and will stay anonymous. I have learned some deeply troubling things and there is a lot more to come – this is just the very beginning. Here is some of what I can tell you.

— FatMan (@FatManTerra) May 23, 2022

From bad to worse

In early May, roughly $60 billion vanished from the Terra ecosystem. The cause was the UST stablecoin losing its $1 peg, which subsequently triggered a drop in LUNA‘s price due to the algorithmic mechanisms that balance both pools of tokens.

The fallout has had significant repercussions across the crypto industry and beyond, including talk of stricter regulation to prevent a repeat, the general loss of confidence in digital assets, and most of all, the devastation of lives.

@FatManTerra recently reported on the human impact of the scandal. As expected, most respondents reported severe financial consequences and adverse effects on mental health.

The issue of self-harm and suicide was also broached, with 41% of victims saying they had considered these actions.

However, far from being a series of unfortunate events leading up to this point, @FatManTerra makes several allegations of mismanagement, manipulation, and collusion.

The allegations

@FatManTerra made four allegations based on reports from whistleblowers. However, he doesn’t go into detailed explanations, adding that he “cannot say.” Nonetheless, he is adamant that “justice is coming.”

There is far more that I cannot say, but know that I know, and know that justice is coming, because this time I think you went too far – this time you killed people – someone has to fight for them. If I go, someone will take my place. This is nothing – just the start. Go time.

— FatMan (@FatManTerra) May 23, 2022

The first allegation involves infrastructure developer Jump, who @FatManTerra claims offered Terra a bail-out deal in May 2021, which involved repayments of millions in LUNA tokens each month.

He added that Jump is implicated in manipulating retail users “into losing billions on UST but especially LUNA” — pointing the finger at Jump CEO Kanav Kariya.

@KanavKariya I know who controls you behind the scenes (B); I know about your Slack group having a 14 day retention window

— FatMan (@FatManTerra) May 23, 2022

Also involved in the allegations is FTX CEO Sam Bankman-Fried and a “handshake deal” concerning Solana-based decentralized exchange Serum. Again, no further details were given by @FatManTerra.

@SBF_FTX I know about the 30% Serum handshake deal with Jump and what you did to retail investors after

— FatMan (@FatManTerra) May 23, 2022

Investor and Crypto Banter host Miles Deutscher called the revelations deep, if true. He called for further evidence to back up the claims but added that “shady stuff was going on.”

Do Kwon had previously proposed a fork to revive the Terra ecosystem. However, the plan looks in doubt as Korean authorities intervened on May 23 by freezing the assets of Luna Foundation Guard on charges of embezzlement.