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, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, who was once dubbed the “Cryptocurrency King” for his success in the crypto space, co-founded Terraform Labs and now faces a maximum sentence of 25 years in prison. However, with his guilty plea, his sentence may be reduced to 12 years.
TerraUSD and Luna, which were launched in 2018 and 2019, respectively, were once the darlings of the crypto world. TerraUSD, also known as UST, was a stablecoin pegged to the US dollar, while Luna was a cryptocurrency that was designed to be paired with UST. The two coins were designed to work together, with UST being used as a reserve asset to back the value of Luna.
However, in May 2022, the value of UST and Luna began to plummet, leading to a massive sell-off that wiped out nearly $40 billion (approximately ₹3.5 lakh crore) in value. The collapse of the Terra ecosystem sent shockwaves through the crypto world, leading to widespread losses for investors and a loss of confidence in the entire crypto space.
But behind the scenes, investigators had been building a case against Do Kwon and Terraform Labs, alleging that the company had engaged in a massive fraud scheme. According to the US Department of Justice, Kwon and his co-conspirators had promised investors that UST and Luna were backed by a massive reserve of assets, when in reality, they were largely unbacked.
The investigation found that Kwon and his co-conspirators had used the funds raised from the sale of UST and Luna to finance their own lavish lifestyles, including the purchase of luxury properties and the funding of a private jet. They also used the funds to pay off earlier investors and to prop up the value of the coins.
Do Kwon’s guilty plea marks a significant turning point in the case, and is likely to have significant implications for the crypto space as a whole. For one, it serves as a warning to other crypto entrepreneurs who may be tempted to engage in fraudulent activities, and highlights the risks and consequences of participating in the crypto space.
But the guilty plea also raises questions about the regulatory environment in which the crypto space operates. Critics have long argued that the lack of clear regulations and oversight has created a Wild West environment in which fraudulent activity can thrive.
The collapse of TerraUSD and Luna also highlights the risks and volatility of the crypto space, and the need for investors to approach it with a clear understanding of the risks involved. While some investors may have made significant profits from the rise of UST and Luna, others lost significant sums of money in the collapse.
In the aftermath of the guilty plea, it remains to be seen what the future holds for Do Kwon and Terraform Labs. While the 12-year sentence is a significant reduction from the maximum 25-year sentence, it is still a severe penalty. And with the case now concluded, the crypto space can begin to move on from the drama and scandal surrounding TerraUSD and Luna.
