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LUNA / UST turns from negligence to straight fraud
I've written about LUNA a few weeks ago, and it's only gotten worse.
🧵 Some of you thought $80m per month was bad. That's nothing. Here's how Do Kwon cashed out $2.7 billion (33 x $80m!) over the span of mere months thanks to Degenbox: the perfect mechanism to drain liquidity out of the LUNA & UST system and into hard money like USDT. (1/13)
— FatMan (@FatManTerra) June 11, 2022
Basically Do-Kwon promoted and abused Degenbox borrowing protocol to create a lot of liquidity around the peg, then he was able to dump $2.8 billion without disturbing the peg. Do-Kwon responded claiming it was false, because you know, just trust me:
1/ This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false
— Do Kwon 🌕 (@stablekwon) June 12, 2022
But surely the comments expose his fraud so let's check them out... oh he turned comments off. He's still keeping up the facade about Terra 2.0 as prior bag holders keep the project alive. If I got pulled and someone airdropped some tokens in my direction, I would at least play along until I can offload.
This guy is a criminal. Even without this, he's grossly negligent and a scam artist. To repeat, anyone promising you a double digit return for no risk is bullshitting you. I don't care about their justification, it's just not realistic in this environment. You're taking on some kind of risk and the worse kind of risk is the one you don't understand. I'm no fan of shitcoins, but ask someone holding the popular dog based token at the time, and they'll likely begrudgingly admit that it could go down. But this is a different level of abuse.
I get it, people like the technology and are desperate for a use-case. I count myself as one of these people. But that enables fraudsters like Do-Kwon to sell their bullshit. And I'm definitely not sold on NFTs as filling this use-case.
The last hero we've seen in crypto was Satoshi Nakamoto. He gave us Bitcoin, and God-bless the developers that work to maintain the protocol. But there are no more heroes in the space. Even Vitalik is likely compromised and the people pulling the strings over at Ethereum is very concentrated. Even the distribution of coins is very concentrated from last I've read. If the insiders decide to dump, the valuation would quickly implode bringing shitcoins along, developers would have no incentive to work and we'd enter into a crypto winter.
But take someone like Sam Bankman-Fried. I was impressed after reading a profile a while back. But since then, he's really lost the plot. A few weeks ago he took out an ad in Vogue, after hiring supermodel Gisele Bundchen to help him spend his money.
To be fair, beautiful women are often uniquely equipped for this task, but come on. He obviously had to get his face out there as well. I've seen it and now so do you:
You can read more about FTX and Vogue here but let's just say Sam has lost the plot. We need more pre-2000s Bill Gates pushing real software that transformed the world, and fewer post-2000s Bill Gates trying to transform the world with no accountability.
There are developers doing good work but the fraudster ratio is out of control and likely keeping a lot of people out. And even when you get someone with good intentions like Sam, the system eats them alive. They get sucked into the uber-rich philanthropy racket, suddenly start hanging out with models and start texting with Ashton Kutcher. And before you know it they're so far removed from their original mission that they might as well be big bank CEOs.
Action
I was surprised that volumes stayed up, but they have.
Crypto is obviously hurting. Bitcoin is down almost 25% in the last week, and that's coming off a few bad weeks already. ETH is down over 35% and it's all red for the rest of the shitcoins. BNB is down to early 2021 levels just after the first big pump. The one silver lining, at least for me, is that the shitcoins are hurting a lot more than Bitcoin. As I've mentioned in prior posts, I'm becoming more and more of a Bitcoin maximalist. There are just too many scam artists out there and the siren calls of easy money are too great for most to resist. I think we'll enter into a crypto winter, but not before we deflate a bit more and totally wipe out a lot of the scammier shitcoins and hopefully put a few people like Do-Kwon behind bars.
Winners and Losers
| Place | account | games played | won | won USD | Winnings Even Money | Average bet size |
| 1 | 0xc2c58a2f0880351199822d4b58940fbd3e40f24c | 165 | 72.27 | 18,068.0 | 9.68 | 3.01 |
| 2 | 0xee156093c5069ee5752e169e4385e7a49d223310 | 88 | 59.58 | 14,896.0 | 0.11 | 12.04 |
| 3 | 0x906ecc0d9cabdd19b2ece0378e78c7c2f784d60e | 40 | 49.5 | 12,374.0 | 12.71 | 4.94 |
| 4 | 0x364eeff5465faac1e7957416cbd04f8ac5674615 | 13 | 48.82 | 12,204.0 | 2.95 | 14.04 |
| 5 | 0xb39ad8c270ca6ad41c1703c9b66a38459339cf26 | 7 | 36.07 | 9,019.0 | 1.88 | 13.35 |
| 6 | 0xcd46bcc3fbce77b27ef35f7330109b072cdfb553 | 23 | 30.08 | 7,520.0 | 7.8 | 1.96 |
| 7 | 0x35d0cb912c4c37110087f322fb11161a14e5dab6 | 200 | 27.72 | 6,930.0 | 14.55 | 1.01 |
| 8 | 0x9670edf1e6f34fb902bb1aa82eb8f281229e583a | 198 | 26.58 | 6,645.0 | 22.15 | 1.2 |
| 9 | 0x7faaead331f08287b6c3ea45877ca982f87823ee | 43 | 24.99 | 6,248.0 | 15.85 | 2.64 |
| 10 | 0x7bb055421f56e28432767eb7e75e479f0a9dcdfa | 94 | 24.09 | 6,023.0 | 20.44 | 0.93 |
There we go. Got some okay winners with big bets. Our #2, #4, #5 and #9 winners are the same aggregator account from last week. Looks like this guy is the only one making money. But then again he has some of the biggest losers below, including the #1 and #2 biggest losers.
Let's look at the losers
| Place | from | games played | won | won USD | Winnings Even Money | Average bet size |
| 1 | 0x18c1c597014ebdd1ae3b7d7cb2012f5145a4d7b3 | 13 | -117.56 | -29,390.0 | -7.92 | 16.29 |
| 2 | 0x8537884f7afeb99c15be5f8e53d575eeaa1e476f | 23 | -111.33 | -27,832.0 | -3.24 | 17.27 |
| 3 | 0xc1f265e222c5a4b6c8c536f9cc138c648518b6ac | 817 | -92.66 | -23,166.0 | -27.48 | 1.68 |
| 4 | 0xf7158d79a9939b880cc79dac9492a466d9d587a0 | 546 | -80.32 | -20,080.0 | -13.06 | 2.55 |
| 5 | 0x40ef716084e6f3d53b1715427880bfd09fdf9c0c | 218 | -74.48 | -18,619.0 | -19.79 | 3.87 |
| 6 | 0x9825ca7fd5d4c9f31492a3b67916e2e6b5e2dd91 | 374 | -52.95 | -13,237.0 | -12.75 | 4.31 |
| 7 | 0xe0b5455d4cfbaebc5cae43de2fa069bf943a62f5 | 52 | -52.45 | -13,113.0 | -7.35 | 6.95 |
| 8 | 0x809655ff1ac19518443d5f2438bc5bd90994659d | 409 | -51.2 | -12,800.0 | -31.52 | 1.45 |
| 9 | 0x64bae3827dbbe53b1b207d4bcfcd28fabb82d76d | 62 | -48.13 | -12,032.0 | -7.26 | 5.81 |
| 10 | 0x2696010f742e501c831af284a18ed89d46531833 | 145 | -43.44 | -10,861.0 | 0.68 | 1.9 |
Mostly algo and our increasingly aggressive friend from the winners section. I'm surprised people are still playing at the volume they are, because pretty much no one is winning. I know I've bowed out and haven't had a time yet to revise my strategy. I look at the top players every week and no one is winning consistently. You'll see people win 30 even money bets in one week and then lose 20 the next week. And it's been like this for a while.
I don't know how the crashing crypto prices will affect the games, but I imagine a lot of exchanges are hurting and will pull back active development and hiring. There are more than enough fires to put out before they do anything in this space. As far as players, I would think people pull back on gambling as their crypto fortunes dwindle. But I honestly have no idea where this goes.
As always, feel free to reach out with questions or comments or want my to highlight anything different on my weekly market recaps. If you like what you read and want to subscribe to receive an email when a new post is published, click here.
Good luck and bet responsibly!