Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
In a shocking turn of events, South Korean entrepreneur Do Kwon, dubbed by some as the ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, who was behind the cryptocurrencies TerraUSD (UST) and Luna (LUNA), which lost a staggering $40 billion (nearly ₹3.5 lakh crore) in 2022, co-founded Terraform Labs and faced a possible 25-year prison sentence. However, with his admission of guilt, his sentence may be reduced to as little as 12 years.
Do Kwon’s journey to becoming the ‘Crypto King’ began in 2018 when he co-founded Terraform Labs with Daniel Shin. The company aimed to create a stablecoin, TerraUSD (UST), which was designed to maintain a peg to the US dollar. UST was marketed as a more stable alternative to other cryptocurrencies, and it quickly gained popularity. Its companion cryptocurrency, Luna (LUNA), served as a reserve currency for UST and was used to mint new UST tokens.
However, things took a turn for the worse in May 2022 when the value of UST began to plummet. The collapse of UST and LUNA led to a global cryptocurrency market crash, with many investors losing significant amounts of money. The incident was dubbed the “Luna-Terra Crash” and was widely covered in the media.
The aftermath of the crash saw Kwon and Terraform Labs facing numerous legal challenges, including a class-action lawsuit in the United States and investigations by regulatory bodies in South Korea. In October 2022, Kwon was charged with conspiracy to defraud and wire fraud by the US Department of Justice.
Now, with his guilty plea, Kwon has admitted to conspiring with others to defraud investors and to wire fraud. The exact terms of his plea deal have not been disclosed, but it is expected that he will face a reduced sentence of around 12 years in prison.
The consequences of Kwon’s actions are far-reaching and devastating. The collapse of UST and LUNA led to widespread financial losses, with some investors reportedly losing their life savings. The incident also raised questions about the regulatory framework for cryptocurrencies and the lack of oversight and accountability in the industry.
In a statement, the US Department of Justice described Kwon’s actions as “brazen” and “egregious”. “Do Kwon and his co-conspirators engaged in a fraudulent scheme that defrauded investors of millions of dollars,” the statement read. “Their actions have caused significant harm to investors and have undermined trust in the cryptocurrency market.”
Kwon’s guilty plea marks a significant moment in the history of cryptocurrency and serves as a warning to others in the industry. It is a reminder that the actions of individuals can have far-reaching consequences and that accountability is essential in any industry.
As the cryptocurrency market continues to evolve, it is crucial that regulatory bodies and investors alike remain vigilant and proactive in addressing the risks and challenges associated with this rapidly changing landscape.
