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, the mastermind behind the now-defunct cryptocurrencies TerraUSD (UST) and Luna, which lost a staggering $40 billion (nearly ₹3.5 lakh crore) in 2022, co-founded Terraform Labs and faced a potential 25-year prison sentence. However, with his admission of guilt, Kwon may be able to reduce his sentence to 12 years.
For those who may not be familiar, Do Kwon and his company, Terraform Labs, created the TerraUSD (UST) stablecoin, which was pegged to the value of the US dollar. The stablecoin was designed to be a safe and reliable store of value, but it collapsed in May 2022, wiping out the market value of UST and its sister cryptocurrency, Luna. The collapse sent shockwaves through the cryptocurrency market, leaving many investors with significant losses.
Kwon’s plea deal comes after he was charged with conspiracy to commit wire fraud and securities fraud. In a press release, the US Department of Justice stated that Kwon and his co-conspirators “engaged in a scheme to defraud investors and promote the sale of TerraUSD and Luna, despite knowing that the cryptocurrencies were unsuitable for retail investors and were highly risky.”
The investigation into Kwon’s activities began in June 2022, just months after the collapse of UST and Luna. Authorities seized millions of dollars in cryptocurrency and other assets from Kwon and his associates, including his personal cryptocurrency wallet.
Kwon’s guilty plea is a significant blow to the cryptocurrency community, which had previously hailed him as a visionary and a pioneer in the field. The collapse of UST and Luna was a major setback for the entire cryptocurrency industry, and Kwon’s actions have been widely criticized as reckless and irresponsible.
But what exactly did Kwon do to warrant such severe charges? According to the Department of Justice, Kwon and his co-conspirators engaged in a variety of illegal activities, including:
- Misrepresenting the financial health and stability of TerraUSD and Luna to investors
- Falsifying financial statements and other documents to conceal the true state of the companies
- Using fake social media profiles and other online personas to promote the cryptocurrencies and manipulate the market
- Concealing the ownership and control of the companies from investors
Kwon’s actions were designed to deceive and defraud investors, who were promised returns of up to 20% per annum on their investments in UST and Luna. Instead, the cryptocurrencies collapsed, wiping out the value of many investors’ holdings.
The consequences of Kwon’s actions are still being felt today. The collapse of UST and Luna led to a significant decline in the value of many other cryptocurrencies, and it has also led to increased regulatory scrutiny of the entire cryptocurrency industry.
In the wake of Kwon’s guilty plea, many are calling for greater regulation of the cryptocurrency industry. The collapse of UST and Luna has highlighted the risks and vulnerabilities of the system, and it has also raised important questions about the role of cryptocurrencies in the global financial system.
As Kwon awaits sentencing, many are left wondering what the future holds for the cryptocurrency industry. Will the collapse of UST and Luna mark the end of the era of wild speculation and hype, or will it simply herald a new era of regulation and oversight?
Only time will tell, but one thing is certain: the Crypto King has fallen, and his actions will have far-reaching consequences for the entire cryptocurrency community.
