Terra community litigation fund’s details raise ‘red flags’

@FatManTerra tweeted details of a assemblage litigation money that aims to compensate victims of the Terra ungraded and clarified that helium would not beforehand oregon stock the nexus owed to “red flags.”

I would similar to person a small heart-to-heart with you guys astir the presumption of our imaginable people enactment against Terraform Labs, Do Kwon et al. seeking restitution for UST victims. As you whitethorn person heard, we were exploring a assemblage litigation money to beryllium released soon. (1/17)

— FatMan (@FatManTerra) May 24, 2022

Earlier this month, Terra’s UST stablecoin mislaid its $1 terms peg triggering a illness successful the terms of the backing LUNA token. $60 billion disappeared, leaving victims devastated arsenic a result.

Initial investigation of the concern laid blasted connected the fragile algorithmic pegging mechanism. But allegations person since emerged that foul play was astatine hand.

The societal interaction of the ungraded has been catastrophic. Victims report intelligence wellness issues, and galore person adjacent contemplated self-harm and suicide.

Details of Terra litigation fund

In a bid to compensate victims, @FatManTerra spoke of a assemblage litigation money touted arsenic “the cleanable solution,” a cheaper, “ready-made” option.

This money already existed – it was pitched to maine by 2 trusted lawyers (both real; 1 public, 1 anon) and a expected money manager (anon). This happened respective days ago, and it looked similar the cleanable solution arsenic it was cheaper for the victims and ready-made. (2/17)

— FatMan (@FatManTerra) May 24, 2022

The money volition instrumentality the signifier of a Decentralized Autonomous Organization (DAO). Supporters of the origin tin lend and, arsenic with DAOs, summation voting rights successful the decision-making process.

But considering the deficiency of regularisation astir cryptocurrencies, it’s unclear whether this DAO tin present connected what is promised. Or adjacent if a blockchain solution is the close telephone nether these circumstances.

Nonetheless, @FatManTerra said the funds would beryllium held successful a multisig wallet that requires support from 3 individuals to authorize transactions.

@FatManTerra besides mentioned the summation of a nationalist figure, a lawyer, into the fold truthful victims and supporters tin consciousness assured that the money is legitimate.

Firstly, I insisted that idiosyncratic trusted and public-facing should beryllium added to the multisig. I suggested Cobie oregon a US instrumentality firm. The money contacted a 4th lawyer (a morganatic one) and helium was added arsenic a multisig holder. I was relieved, and things were looking good. (5/17)

— FatMan (@FatManTerra) May 24, 2022

Wait, @FatManTerra isn’t sold connected the DAO?

@FatManTerra’s tweetstorm takes a twist erstwhile helium expresses doubts astir the DAO.

In particular, it emerged that the DAO would redistribute fractional of the donations to the community. @FatManTerra questions wherefore 100% doesn’t spell backmost to the donors and wherefore the DAO has “this level of centralization.”

Two – 50% of the tokens raised would beryllium fixed to the multisig holders to 'slowly distribute' to the community. I assumed that each tokens would spell to donors, and this portion didn't truly marque consciousness to maine – a morganatic DAO would not person this level of centralization. (7/17)

— FatMan (@FatManTerra) May 24, 2022

In addition, wherefore would donors lend to enactment victims and person funds redistributed backmost to them? Surely a donation is fixed to further a origin without expecting a return.

@FatManTerra said helium was pressured to beforehand the DAO but said helium told them helium needed clip and refused to cave and is gladsome helium didn’t due to the fact that “there were excessively galore reddish flags.”

Over the past fewer days, they pressured maine to merchandise their links to the nationalist ASAP. I was diligent and I told them I needed immoderate clip to think. I'm gladsome I did. Due to these caller facts, I person decided not to stock their nexus with the public. There were excessively galore reddish flags. (9/17)

— FatMan (@FatManTerra) May 24, 2022

Despite this seemingly shady effort to nett from the Terra crisis, @FatManTerra said the vulnerability he’s been getting has led to “high illustration instrumentality firms” and  “litigation funders” contacting him.

Three instrumentality firms he’s been successful interaction with person enactment up $15 million and agreed to enactment connected a contingency interest basis, meaning a fixed percent complaint payable lone if the lawsuit wins.

The champion portion of all? This enactment volition beryllium escaped for our people of victims to join. They wage thing upfront & thing if we suffer – if we win, they are fixed their UST indebtedness (minus ineligible fees) consecutive into their pocket. Contingency, though expensive, is rather neat. (14/17)

— FatMan (@FatManTerra) May 24, 2022

Negotiations are presently taking spot to get “the champion imaginable deal” for the victims.