Terra Designer Says Do Kwon Purposely Increased UST Interest Rates From 3.6% To 20% After Being Warned

Zinger Key Points
  • A new report claims Do Kwon had knowledge of Luna's failure before it ever happened.
  • Designer for UST's anchor program states concerns raised with Do Kwon were ignored to attract investors.

A new report claims that Do Kwon, Founder of TerraForm Labs and Terra LUNA/USD, intentionally hiked Anchor Program’s interest from 3.6% to 20%, despite warnings.

What Happened: Mr. B, a designer on Terra’s Anchor Protocol, disclosed to Korean media outlet JBTC, on June 6, that Do Kwon anticipated the fall of Terra. He further revealed that designers had fixed the protocol’s interest rate at 3.6%, as any test run at a higher percentage rate indicated TerraUSD UST/USD would fail.

Despite that, Mr. B said Do Kwon increased the interest to 20%, solely to magnetize retail and institutional investors. Given that the funds held by the company were not enough to fulfil the promised 20% interest rates to investors, Kwon essentially destined this venture for failure. As more money flowed into UST, this algorithmic deficiency ballooned, causing the inevitable crash.

Also See: Investors Sue Terra Founder Do Kwon: What You Need To Know

Why It's Important: The claim that Kwon may have known about UST’s imminent crash and didn't take precautions to avoid Terra's collapse comes after investors lost $60 billion on the crypto. In the cited report, Mr. B states, “Just before the launch, I suggested to CEO Kwon Do-hyeong that the interest rate should be lowered, but it was not accepted.”

Since LUNA's crash, a plethora of investors and media outlets have questioned Kwon’s role in the downfall of Terra. Additionally, this new claim may lead to new legal pursuits against Kwon.

Posted In: AnchorDo KwonInterest RatesLunaTerraCryptocurrencyNewsMarkets