June 13, 2024

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Crypto sleuth ZachXBT has accused Catheon Gaming co-CEO William Wu of irresponsibly investing $20 million in treasury funds in Terra’s Anchor protocol, despite having warnings about Terra’s implosion.

After the collapse of the Terra stablecoin, Wu reportedly only informed institutional investors of the loss, leaving retail investors guessing.

Wu vs. ZachXBT

Leaked WhatsApp chats reveal that Catheon’s former Chief Operating Officer warned Wu on May 12, 2022, about investing in a “single Ponzi scheme that is mid-collapse.”

Wu fired back by saying that hindsight makes it easy to criticize his investment because no one knew how the Terra saga would play out. One Twitter user, Norm, pointed out that Wu’s COO had warned him about a potential collapse while it was happening, negating the “hindsight” argument.

Wu then claimed that Catheon was swept up in the panic and chose the wrong course of action and that the company is looking forward to learning from its mistake.

The TerraUSD stablecoin collapsed roughly on May 8, 2022, after the company behind the cryptocurrency announced that it had made large withdrawals of TerraUSD from a DeFi protocol called Curve Finance, causing the coin to lose its peg to the U.S. dollar. It also bought over $1 billion worth of Bitcoin for a consortium called the Luna Foundation Guard to help keep TerraUSD at $1.

By Monday, May 9, 2022, all mechanisms intended to help the stablecoin stay at $1 failed, causing TerraUSD to fall to a low of 60 cents.

Wu
UST/USD | Source: Bloomberg

By Wednesday, May 11, 2022, it had dropped to a low of 20 cents.

Catheon accuses ZachXBT of spreading FUD

In a press release, Catheon condemned ZachXBT’s leaking of “internal Catheon Gaming communications,” claiming that his actions caused Fear, Uncertainty, and Doubt (FUD). In the cryptocurrency industry, people are accused of spreading FUD when they are believed to be spreading unsubstantiated information about a crypto project.

The COO also confirmed that Catheon had only discussed its investments with private holders and had enough capital for five years should it come under stress.

ZachXBT said this information doesn’t align with an internal Catheon e-mail describing significant cost-cutting measures to reduce its monthly cash usage.

In response, the company claimed that it was not a public company or a Decentralized Autonomous Organization and was not obliged to share confidential information. It claimed that it had diversified its treasury, spread its risk across multiple assets, and invested excess cash in UST because it felt it was a good place to store funds.

Founded in Sep. 2021, Sydney-based Catheon Gaming is a Web3 gaming company responsible for a portfolio of 25 blockchain games. Its flagship project, SolChicks, is an NFT-based play-to-earn game on Solana. Players can level up in-game characters called SolChicks by taking part in challenges. They can also farm unique items or look after their SolChicks like pets. Catheon Gaming uses its CATHEON token as a governance and utility token used across multiple games.

In 2018, the Substratum project, designed to decentralize the internet, controversially employed a full-time trader to trade using funds raised through a 2017 Initial Coin Offering (ICO). The company soon ran out of funds in 2019 and had to lay off staff.

BeInCrypto reached out to Wu for comment but received no response at press time.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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