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, also known as the ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, the co-founder of Terraform Labs, was behind the cryptocurrencies TerraUSD (UST) and Luna, which lost a staggering $40 billion (approximately ₹3.5 lakh crore) in 2022.
The collapse of UST and Luna sent shockwaves through the cryptocurrency market, leaving investors and traders reeling. The fall of the two cryptocurrencies, which were once touted as revolutionary and capable of disrupting the traditional financial system, highlighted the risks and volatility associated with the crypto market.
Kwon’s guilty plea has significant implications for his future, as he now faces a maximum sentence of 25 years in prison. However, with his admission of guilt, the sentence may be reduced to 12 years, according to court documents.
The charges against Kwon stem from his role in the collapse of TerraUSD and Luna, which was triggered by a liquidity crisis. The crisis was caused by a lack of confidence in the stability of the UST stablecoin, which is designed to maintain a stable value relative to the US dollar. When investors lost faith in UST’s stability, they rushed to sell their holdings, causing a sharp decline in the value of the currency and ultimately leading to its collapse.
Luna, which was linked to UST and was designed to maintain its value relative to the value of UST, also collapsed, wiping out the value of investors’ holdings. The collapse of the two cryptocurrencies had far-reaching consequences, including the loss of billions of dollars in investor funds and the destruction of thousands of jobs.
The collapse of TerraUSD and Luna also highlighted the lack of regulation and oversight in the cryptocurrency market. Many experts have called for greater regulation and oversight to prevent similar collapses in the future.
Kwon’s guilty plea is a significant development in the ongoing investigation into the collapse of TerraUSD and Luna. The US Department of Justice, in conjunction with Korean authorities, has been investigating the collapse of the two cryptocurrencies for months.
In a statement, the US Department of Justice said, “Do Kwon’s guilty plea demonstrates his accountability for his role in the collapse of TerraUSD and Luna, which resulted in significant financial losses for numerous investors.”
Kwon’s legal team has indicated that he will cooperate fully with the investigation and will accept any punishment imposed by the court. In a statement, Kwon’s legal team said, “We are pleased that Do Kwon has taken responsibility for his actions and has agreed to cooperate with the investigation.”
The guilty plea of Do Kwon is a significant setback for the cryptocurrency industry, which has long been plagued by scams, fraud, and instability. The collapse of TerraUSD and Luna highlights the need for greater regulation and oversight to prevent similar collapses in the future.
As the cryptocurrency market continues to evolve and grow, it is essential that regulators and lawmakers take steps to ensure the stability and security of the market. The guilty plea of Do Kwon is a reminder of the risks and consequences associated with investing in the cryptocurrency market, and it serves as a warning to others who may be considering engaging in similar fraud.
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