Terra Research Forum member @FatManTerra released the results of the investigation: the culprit that directly caused the collapse of UST decoupling and LUNA was actually Terraform Labs led by @stablekwon.

“Humans can lie, but blockchain can’t.” -- FatMan

The following is a translation of the full report:

The latest on-chain data reveals the root cause of UST’s depreciation in May: in the 3 weeks before the decoupling, a single entity dumped over $450 million of UST on the open market. 4 days after their last sale, UST began to collapse. That entity?

None other than Terraform Labs (TFL)

This heavy data, collated by anonymous researcher @Cycle_22 (who discovered Hodlnaut’s bankruptcy), shows that TFL suddenly began frantically selling hundreds of millions of UST some time before UST decoupled.

TFL has been promoting the idea that UST was "attacked". But this is fake news. In reality, TFL itself irresponsibly sold a large amount of UST in a short period of time, thereby weakening the balance of the Curve pool. This reduced liquidity and seriously jeopardized the target's UST anchor.

The final push for UST decoupling could be executed by anyone. Because how many big institutions own UST and might want to sell after seeing TFL running out of liquidity?

Genesis, 3AC, Hodlnaut, Jump, Celsius? This list is not exhaustive.

But this is tangential. How did an $80 million sell-off derail a $10 billion-plus ecosystem?

In short, think of UST as a box. Real dollars can go in, and come out at the same time. As long as there are enough left, anyone can exchange their UST tokens for real dollars from the box.

At the same time, Anchor's high yields led thousands of investors to put their own real dollars in the box for yield and "safety".

But there is one man — Do Kwon — who has amassed billions of UST tokens without putting any real dollars into them. He printed (minted) them out of thin air with his LUNA tokens.

This UST can now be used to remove real US dollars from the box, thus essentially controlling a money printing machine.

Then TFL and Do Kwon started to drain funds out of the ecosystem at the fastest speed. We have already discussed Degenbox, through which more than 2.7 billion US dollars were exchanged.

But the aforementioned $1 billion was added on top of that! This is even worse because it was removed weeks before UST depegged.

The most despicable part, though, is that TFL and Do Kwon keep promoting Anchor as a savings product for retail investors. The Terra whitepaper also says that UST will remain price stable and can always be redeemed for $1 worth of LUNA (until they dump it).

But why do all this?

Since Do Kwon holds the key to the box, his goal is simple: convince people to put as much real money as possible into the box.

He did this by any means necessary, projecting an image of authority, confidence and stability, but he quietly exited stage left.

So, when the UST decoupling begins, what will happen when retail investors try to exchange their UST tokens back for the real dollars they invested?

That is, the money is gone, the box is empty, because someone took the dollars in advance.

UST prices then plummeted as people panic-sold to cash out.

Liquidity pools have been drained. Order book depth is thin. UST is on its knees, hanging by a thread - like a zombie as real dollars have been extracted from the system.

At this point, all it takes is one large UST sell order to bring down the entire system while also creating the perfect scapegoat.

LFG used a small portion of their profits to symbolically defend the price peg, but it will not save UST. Audit shows 47,000 BTC was sent to Jump Crypto, but there is no transaction log/evidence.

The relationship between Jump and the UST decoupling incident leaves me with many questions and a more thorough investigation is necessary.

We already know that Do Kwon lied to the public about his connection to Basis Cash and made the Terra stablecoin appear stronger and more stable through on-chain deception.

But what we have uncovered today takes the deception and fraud he perpetrated to a new level.

It is one thing to systematically “dump” UST to retail investors throughout 2021 while selling UST’s stablecoin narrative.

But to do so in late April 22, to cause a liquidity crunch in UST themselves, directly leading to the decoupling of UST, and then to blame others while pretending to apologize is incredibly despicable and pathetic.

Yes, TFL ripped off retail investors. We know it.

However, TFL and Do Kwon’s actions also led to a systemic collapse of the entire cryptocurrency industry, and we can still feel the transmission effects every day.

He was washed up, he enriched his company with billions while others suffered.

Do Kwon is still eluding South Korean authorities, but I firmly believe that given enough time, an international investigation will help bring about "closure."

The world needs to send a strong message - fraud on this scale cannot and should not go unpunished!

The same is true for SBF.

These transactions prove that over $1 billion was sold by TFL on Curve or sent to Binance.

Oh, then how do we confirm that it was TFL that dumped all the USTs?

They accidentally admitted this in their own audit.

Humans can lie, but blockchain cannot.