Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
The world of cryptocurrency has been rocked by another shocking development, as South Korean entrepreneur Do Kwon, dubbed by some as the ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, the mastermind behind the cryptocurrencies TerraUSD and Luna, which lost a staggering $40 billion (nearly ₹3.5 lakh crore) in 2022, co-founded Terraform Labs and now faces a potential prison sentence.
In a dramatic turn of events, Kwon, 31, admitted to the charges in a US court, which could see him serve up to 25 years in prison. However, with his guilty plea, his sentence could be reduced to as little as 12 years.
For those who may not be familiar with the TerraUSD and Luna saga, it’s worth taking a step back to understand the magnitude of the fraud and the devastating impact it had on investors worldwide.
TerraUSD, also known as UST, was a stablecoin, designed to maintain a stable value by being pegged to the US dollar. Luna, on the other hand, was the native cryptocurrency of the Terra network, which was built to facilitate transactions and smart contracts. The two cryptocurrencies were designed to be used together, with UST serving as the stablecoin and Luna as the underlying cryptocurrency.
However, in May 2022, the TerraUSD and Luna ecosystem suddenly collapsed, sending shockwaves through the cryptocurrency market. The sudden devaluation of UST led to a massive sell-off of Luna, causing its value to plummet. The consequence was a catastrophic loss of $40 billion, leaving investors with significant financial losses.
The collapse was attributed to a series of events, including the over-issuance of TerraUSD, which led to a loss of confidence in the stablecoin’s ability to maintain its peg to the US dollar. The subsequent collapse of Luna further exacerbated the situation, wiping out billions of dollars in value.
The aftermath of the collapse was devastating, with many investors left reeling from the sudden loss of their savings. The collapse also led to a widespread loss of trust in the cryptocurrency market, with many questioning the viability of decentralized finance (DeFi) and the stability of the global financial system.
In the wake of the collapse, authorities began investigating the events leading up to the collapse, with Kwon and other Terraform Labs executives facing multiple charges, including conspiracy to commit fraud and wire fraud.
Kwon’s guilty plea marks a significant development in the investigation, as it confirms that he was aware of the fraudulent activities and actively participated in them. The plea also sets the stage for his sentencing, which is expected to be significant.
The implications of Kwon’s guilty plea are far-reaching, not only for him but also for the cryptocurrency market as a whole. The collapse of TerraUSD and Luna served as a wake-up call for investors, regulators, and the industry as a whole, highlighting the need for greater oversight and regulation in the cryptocurrency space.
In the aftermath of the collapse, there have been numerous calls for greater regulation of the cryptocurrency market, with many arguing that the lack of oversight enabled the fraud to occur. The guilty plea of Kwon serves as a stark reminder of the importance of regulation and the need for greater accountability in the industry.
As the cryptocurrency market continues to evolve, the TerraUSD and Luna saga serves as a cautionary tale, highlighting the risks and consequences of unregulated activity. While Kwon’s guilty plea marks a significant development in the investigation, it also serves as a reminder of the importance of ethical behavior and transparency in the industry.
