On June 6, Terra Anchor Protocol designer, referred to as Mr. B, revealed to the local South Korean media outlet JBTC that the anchor team could foresee Terra’s collapse from the time they developed it. He stated that he even informed CEO Do Kwon about this in advance, but he did not listen at all. Mr. B claimed that he and other developers fixed Anchor’s interest rate at 3.6% because all tests beyond this rate resulted in UST’s collapse prior to the launch. However, a week before its launch, Do Kwon, the CEO of TerraForm Labs, decided to change it to 20% in an attempt to attract more investors to Terra. He stated that there are documents which indicate how the management pushed the business forward even though they knew the risk of a collapse. Wu Blockchain announced the news on its Twitter account on June 8.
According to JTBC, Anchor's designers said that the original interest rate was designed to be 3.6%, but the proposal was not accepted by Do Kwon, and Anchor's interest rate was raised to 20% a week before the release. https://t.co/THhM51shhM
— Wu Blockchain (@WuBlockchain) June 8, 2022
He revealed that the original interest rate (3.6%) for the company’s anchor programme was planned to pay a smaller amount to investors than what it was launched with. The anchor designer stated that even the 3.6% ROI was too much; yet he chose to put the interest rate at that amount, which is somewhat greater than what typical financial institutions pay. Despite all of these factors and Terra’s Anchor program, the core designer learned a week later that Terra would proceed with the venture with a 20% ROI.
He remarked:
“Just before the launch, I suggested to CEO Kwon Do-hyeong that the interest rate should be lowered, but it was not accepted.”
According to him, Kwon allegedly stated that if TerraForm Labs is unable to pay the 20% to investors, the company will “cut it all,” implying that the initiative will be terminated. The UST plummeted as the interest rate was too high in relation to internal funds, the deficit continued to increase, and the slightest worsening in market circumstances caused it to collapse all at once.
This isn’t the first time Kwon has been blamed for the destruction of the Terra ecosystem tokens. During an investigation last month, a Terra employee revealed that despite massive failures in internal testing, Kwon went ahead and launched Terra.
Read more:
- Binance initiates its probe on serious allegations against Terra 2.0 and Do Kwon
- MIR token scam: Do Kwon set up Mirror Protocol to scam individual investors?
