Analyst suspects Do Kwon of Mirror Protocol fraud

The chief executive of Terraform Labs (TFL), Do Kwon, and venture capitalists manipulated the governance of the DeFi project Mirror Protocol and deceived retail investors. The analyst behind the pseudonym FatManTerra arrived at this conclusion.

🧵👇 Here’s a deep dive into chain data suggesting Mirror Protocol, TFL’s ‘decentralized’ stock exchange, is really just a farce designed to enrich Do Kwon/VCs while manipulating governance and screwing over retail. Thank you for being so bad at hiding on-chain moves, Do. 🧵👇

— FatMan (@FatManTerra) May 25, 2022

He identified an Ethereum wallet through which yield-farming smart contracts in Mirror Protocol were initiated. The address was linked to the cross-chain bridge Wormhole, belonging to Jump Trading.

At times the address held a dominant share of Mirror’s Ethereum liquidity pool, FatManTerra noted.

“Thus, they received the majority of rewards in MIR tokens, which allowed them to have disproportionate influence over governance decisions,” the analyst said.

This wallet and associated addresses distributed assets to create the illusion of decentralized governance of the protocol, FatManTerra asserts.

One of the addresses sent assets to the organisation dao5, for which Kwon serves as an official adviser, the expert noted.

Here’s a fun little bonus bit. One of the addresses above (https://t.co/Dgz46MjBXU) bridged over money to this Ethereum address (https://t.co/ETy7vBUqw3) that owns the \”dao5.eth\” ENS name. Uh oh… What’s this? (12/19) pic.twitter.com/UYF5DdBV5t

— FatMan (@FatManTerra) May 25, 2022

All of these addresses evidently had access to substantial capital, FatManTerra argues, pointing to multi-million-dollar operations with Mirror’s synthetic products and other assets in the Terra ecosystem. As an example, he cited a transaction of 750 million UST.

Collecting the data, the analyst concluded that “TFL and related entities secretly control a large portion of Mirror’s governance powers without any proper disclosure.”

“There also appears to be hand-in-glove collaboration between TFL and Jump to move capital out of the Mirror ecosystem without fair disclosure to retail investors, whom the protocol was pitched as a fair, decentralised alternative for their stock-market savings,” FatManTerra wrote.

According to him, the findings corroborate much of the information previously provided by a Jump Trading employee who spoke on condition of anonymity.

Earlier reports noted that Kwon was one of the co-founders of the failed algorithmic stablecoin Basis Cash (BAC).