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The spectacular collapse of Terra’s UST stablecoin lost its $1 price peg. which has also triggered the price of the backing LUNA token. overall $60 billion disappeared, leaving the investors devastated as a result.
The blame was on the fragile algorithmic stablecoin pegging mechanism initially, but the allegations have emerged that foul play was at hand. Further, the effect of the scandal on social media has been catastrophic and the victims suffering mental health issues as well as self-harm and suicide attempts of victims have been reported.
In response to this FatManTerra tweeted the details of a community litigation fund aimed to compensate the victims of the Terra Scandal. He further clarified that he would not promote or share the link due to red flags.
I would like to have a little heart-to-heart with you guys about the status of our potential class action against Terraform Labs, Do Kwon et al. seeking restitution for UST victims. As you may have heard, we were exploring a community litigation fund to be released soon. (1/17)
— FatMan (@FatManTerra) May 24, 2022
During a bid to compensate victims, FatManTerra spoke of a community litigation fund touted as ” the perfect solution”, and a cheaper “ready-made” option. The funds will be transformed into the form of a Decentralized Autonomous Organization (DAO), and supporters of the cause can contribute with DAOs. Which will result in the form of voting rights in the decision-making process for the donors.
FatManTerra by responding to the doubts said that the funds would be held in a multi-sig wallet where the transactions need to be authorized by three individuals. And he had also assured the public by mentioning the involvement of a public figure, a lawyer, in the deal.
There comes a twist, as FatManTerra questions DAO on its redistribution of half of the donations only to the community. Why not 100%, he also questions the DAO’s centralization as well in addition.
In addition to this FatManTerra also claims DAO for getting the donations from donors and returning back to them, “donations won’t expect returns”.
He also added that he was pressured to promote DAO for which he took time and refused to cave as there were too many red flags, he admires his decision, he said.
This further seems like a shady attempt to profit from the crisis of Terra, his exposure has led him to “high profile law firms” and “litigation funders”.
FatManTerra has been in contact with Three law firms, have put up $15 million, and agreed to work on a contingency fee basis, which means a fixed percentage has to be paid if the case wins. Negotiations are also taking place to get the best possible deal for victims.