Catheon Gaming CEO Gambled and Lost $20M of Treasury Funds, Hiding it From Crypto Community

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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.”

Your own COO literally tried to warn you but you’re too arrogant

— ZachXBT (@zachxbt) November 16, 2022

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.

Man just said “easy to say in hindsight” after being told in real time lmao

— Norm (@15percentNoRisk) November 16, 2022

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.

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.

We strongly condemn bad actors leaking confidential company information to generate publicity.

These actions cause real harm and make a mockery of the people working countless hours to innovate and push the industry forward.

Our full responseAMA at 1pm UTC later today.

— Catheon Gaming (SolChicks + 25 others) (@CatheonGaming) November 16, 2022

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.

I reached out to the COO for comment about this and they replied:

— ZachXBT (@zachxbt) November 15, 2022

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

It’s disturbing they think retail doesn’t need to know & only large investors do. It also contradicts an internal email sent out about major layoffs

Last year Solchicks was featured in a thread of mine for deceptive marketing (undisclosed ads/using bots) & poor management

— ZachXBT (@zachxbt) November 15, 2022

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.

The post Catheon Gaming CEO Gambled and Lost $20M of Treasury Funds, Hiding it From Crypto Community appeared first on BeInCrypto.

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