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 to many as the ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, who co-founded Terraform Labs and was behind the cryptocurrencies TerraUSD (UST) and Luna (LUNA), faced a maximum sentence of 25 years in prison for his alleged crimes. However, with his guilty plea, he may be able to reduce his sentence to as little as 12 years.
Kwon’s fall from grace is a remarkable one. Just a few years ago, he was hailed as a visionary in the cryptocurrency space, with his creations TerraUSD and Luna attracting millions of users and billions of dollars in investment. However, in May 2022, the TerraUSD stablecoin lost its peg to the US dollar, causing a massive decline in the value of Luna and sparking a global cryptocurrency crisis.
The fallout was swift and severe. The value of Luna plummeted from a high of $118 in April 2022 to almost nothing, wiping out the life savings of many investors. The collapse of the Terra ecosystem led to a loss of nearly $40 billion (approximately ₹3.5 lakh crore), making it one of the largest financial failures in history.
Kwon’s descent into fraud began, according to prosecutors, when he and his co-conspirators began to manipulate the market by using fake trading volume and wash trading to inflate the value of Luna. They also allegedly used a complex scheme involving multiple accounts and shell companies to launder money and conceal their tracks.
In addition, Kwon and his team were accused of making false statements to investors and the media, downplaying the risks associated with TerraUSD and Luna and claiming that the stablecoin was backed by a reserve of US dollars when, in reality, it was not.
The guilty plea comes as a significant blow to Kwon and his supporters, who had long maintained that the collapse of TerraUSD and Luna was due to external factors beyond their control. However, the evidence presented by prosecutors paints a different picture, showing a deliberate and systematic effort to defraud investors and manipulate the market.
Under the terms of his plea agreement, Kwon will likely face a reduced sentence of 12 years in prison, although the exact length of his sentence will be determined by a judge at his sentencing hearing. Kwon will also be required to pay a significant fine and will be subject to supervised release for a period of time after his release from prison.
Kwon’s guilty plea is a significant development in the ongoing saga of the cryptocurrency world, which has been plagued by scandals and frauds in recent years. The collapse of TerraUSD and Luna serves as a sobering reminder of the risks involved in investing in cryptocurrencies and the importance of due diligence and caution when dealing with new and untested investments.
As the world of cryptocurrency continues to evolve and mature, it is clear that the days of wild speculation and reckless risk-taking are behind us. The era of the ‘Crypto King’ may be over, but the lessons learned from the TerraUSD and Luna debacle will serve as a valuable reminder of the importance of transparency, accountability, and responsible investing in the years to come.
