FatManTerra alleged on Dec. 6 that the root cause of Terra’s UST implosion was Terraform Labs’ (TFL) dumping of over $450 million UST on the open market over three weeks before the ecosystem collapsed.
🧵 New blockchain data reveals the root cause of the May UST depeg. In the 3 weeks leading up to the depeg, one entity dumped over $450m of UST on the open market. 4 days after their last sale, UST started collapsing.
That entity? None other than Terraform Labs. Details inside. pic.twitter.com/aFfzgpBZ5A
— FatMan (@FatManTerra) December 6, 2022
FatManTerra cited blockchain data collated by an anonymous researcher, Cycle_22, whom he said discovered the insolvency of Singapore-based crypto lender Hodlnaut.
Terraform bots addresses dumped $1B UST
On-chain evidence shows that TFL dumped over $1 billion UST by selling on Curve or transferring to Binance. The researcher was able to uncover this because all the transfers originated from the TFL Curve Bot 2 address that was also mentioned in the independent audit it released.
FatManTerra says TFL weakened the Curve pool
FatmanTerra tweeted that TFL’s narrative that UST was attacked is false because the developers weakened the decentralized stablecoin curve pool.
According to him, the irresponsible dumping of a massive amount of UST within a short timeframe reduced liquidity and severely weakened the peg.
According to FatManTerra, this massive dump and the $2.7 billion that TFL removed through Degenbox contributed to the total collapse. This meant that TFL and Do Kwon had effectively removed all the real dollars in the ecosystem, making it impossible for people to redeem their UST.
Although TFL and Luna Foundation Guard recently released an independent audit to show it did everything to redeem the peg, including spending the entire Bitcoin peg defense fund, the audit indicates that LFG sent 47k BTC to Jump Crypto, which remains unaccounted for.
The new revelation further adds to the bulk of the evidence against Terraform Labs and Do Kwon, who is currently on the run and is wanted in South Korea