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, known by some as the ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, the co-founder of Terraform Labs, is behind the cryptocurrencies TerraUSD (UST) and Luna, which lost a staggering $40 billion (approximately ₹3.5 lakh crore) in 2022.
Kwon’s admission of guilt comes as a major blow to the cryptocurrency world, which was left reeling after the collapse of his companies’ digital assets. The 31-year-old entrepreneur faced a maximum sentence of 25 years in prison, but his plea deal may see him serve only 12 years.
So, what led to Kwon’s downfall, and what does his guilty plea mean for the future of cryptocurrency?
The Rise and Fall of Terraform Labs
Terraform Labs was founded in 2018 by Do Kwon and his partner, Daniel Shin. The company’s primary focus was on developing a stablecoin, TerraUSD (UST), which was designed to maintain a stable value relative to other cryptocurrencies. UST was pegged to the value of the US dollar, making it an attractive option for investors looking for a stable store of value.
In 2022, Terraform Labs launched Luna, a token that could be used to buy and sell UST. The two cryptocurrencies quickly gained popularity, with UST’s market capitalization reaching over $40 billion.
However, in May 2022, UST’s value began to plummet, sparking a chain reaction that led to the collapse of Luna and the Terra ecosystem. The sudden loss of value led to a massive loss of investor confidence, resulting in a complete wipeout of UST and Luna’s value.
The collapse of Terraform Labs had far-reaching consequences, with many investors losing significant amounts of money. The incident also sparked a heated debate about the regulation of cryptocurrencies and the need for greater transparency in the industry.
The Legal Battle Begins
In the aftermath of the collapse, Kwon and his team faced numerous legal challenges, including lawsuits from investors and regulatory bodies. In June 2022, the US Securities and Exchange Commission (SEC) sued Kwon and Terraform Labs, alleging that they had committed securities fraud by selling unregistered securities.
Kwon and his team denied the allegations, but the legal battle continued to escalate. In February 2023, the US Department of Justice indicted Kwon on charges of conspiracy to commit wire fraud and wire fraud.
Do Kwon Pleads Guilty
Last week, Kwon pleaded guilty to all charges, admitting to conspiracy to defraud and wire fraud. The move is seen as a significant admission of guilt, and it’s likely to have far-reaching consequences for Kwon and his team.
Under the terms of the plea deal, Kwon faces a maximum sentence of 12 years in prison, down from the original 25-year maximum sentence. The deal also requires Kwon to pay a fine and to cooperate with authorities in their ongoing investigation.
The Impact on Cryptocurrency
Kwon’s guilty plea is a significant blow to the cryptocurrency world, which is still reeling from the collapse of Terraform Labs. The incident has raised questions about the regulation of cryptocurrencies and the need for greater transparency in the industry.
Many experts believe that Kwon’s guilty plea will have a chilling effect on the cryptocurrency industry, making it more difficult for companies to raise capital and operate in the market.
However, others believe that the incident will ultimately benefit the industry, as it will lead to greater regulation and oversight. “This is a wake-up call for the cryptocurrency industry,” said one expert. “It’s clear that regulators are taking a closer look at these companies, and it’s going to lead to greater transparency and accountability.”
Conclusion
Do Kwon’s guilty plea is a significant development in the ongoing saga of Terraform Labs and the collapse of UST and Luna. The incident serves as a reminder of the risks involved in investing in cryptocurrencies and the need for greater regulation and oversight in the industry.
As Kwon faces the consequences of his actions, it’s clear that the cryptocurrency world will never be the same again. The incident has raised important questions about the future of cryptocurrency and the need for greater transparency and accountability in the industry.
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