Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
Do Kwon, the South Korean entrepreneur behind the cryptocurrencies TerraUSD and Luna, which lost $40 billion (nearly ₹3.5 lakh crore) in 2022, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, who was dubbed the ‘Cryptocurrency King’ by some, co-founded Terraform Labs and faced 25 years in prison, but his admission may reduce his sentence to 12 years.
Kwon’s guilty plea comes after a lengthy investigation and legal battle. He was arrested in March 2022 in Montenegro, but it took authorities months to extradite him to the United States, where he faced charges. The case against Kwon was led by the US Department of Justice’s (DOJ) Criminal Division’s Fraud Section and the US Attorney’s Office for the Southern District of New York.
TerraUSD, also known as UST, was a stablecoin pegged to the US dollar, while Luna was a cryptocurrency that was supposed to stabilize the value of UST. However, in May 2022, the value of both currencies collapsed, causing widespread panic and losses for investors. The collapse led to a massive sell-off of Luna, causing its value to plummet from $116 to nearly zero.
The investigation revealed that Kwon and his company, Terraform Labs, had engaged in a scheme to defraud investors by falsely representing the value and stability of UST and Luna. The scheme involved manipulating the price of Luna to make it appear more valuable than it was, and using the proceeds to buy UST and keep its value stable.
Kwon’s guilty plea is a significant development in the case, as it means he will likely face a reduced sentence. Under the terms of his plea deal, Kwon could face up to 12 years in prison, down from the maximum 25 years he faced if convicted at trial.
The collapse of TerraUSD and Luna had far-reaching consequences for the cryptocurrency market. It led to a loss of confidence in stablecoins and other cryptocurrencies, and many investors suffered significant losses. The collapse also highlighted the lack of regulation in the cryptocurrency industry, and led to calls for greater oversight.
The case against Kwon is a reminder of the importance of regulating the cryptocurrency industry. While some argue that cryptocurrencies are a new and innovative way to finance, others argue that they are a Wild West that is ripe for exploitation.
In conclusion, Do Kwon’s guilty plea is a significant development in the case against him. While it is unlikely to bring back the value of UST and Luna, it is a step towards accountability and justice for investors who lost money as a result of Kwon’s scheme. As the cryptocurrency industry continues to evolve, it is essential that regulators and law enforcement agencies work together to ensure that the industry is transparent, secure, and free from fraud.
