Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
The world of cryptocurrencies has been marred by numerous scandals and controversies over the years. However, one of the most significant and recent cases involves South Korean entrepreneur Do Kwon, dubbed by some as the ‘Cryptocurrency King’. Kwon, who was behind the cryptocurrencies TerraUSD (UST) and Luna (LUNA), has pleaded guilty to conspiracy to defraud and wire fraud.
The magnitude of the fraud is staggering, with the collapse of UST and LUNA resulting in losses of nearly ₹3.5 lakh crore (approximately $40 billion) in 2022. The collapse of the cryptocurrencies sent shockwaves throughout the global financial markets, leaving many investors and enthusiasts reeling.
Kwon, who co-founded Terraform Labs, the company behind the cryptocurrencies, faced a maximum sentence of 25 years in prison. However, with his guilty plea, he may be able to reduce his sentence to 12 years.
The Rise and Fall of TerraUSD and Luna
TerraUSD (UST) and Luna (LUNA) were once considered to be among the most promising and innovative cryptocurrencies in the market. UST was a stablecoin, designed to maintain a fixed value relative to the US dollar. Luna, on the other hand, was a decentralized platform that allowed users to create and trade their own tokens.
The success of UST and LUNA was meteoric, with the value of LUNA skyrocketing to over $100 billion in May 2022. However, things took a turn for the worse in May 2022, when the value of UST began to plummet. The collapse of UST sent shockwaves throughout the cryptocurrency market, causing the value of LUNA to plummet as well.
The collapse of the cryptocurrencies was attributed to a number of factors, including a significant increase in the supply of UST, which led to a decrease in its value. Additionally, a lack of transparency and accountability in the management of the cryptocurrencies also contributed to their downfall.
The Investigation and Plea Agreement
The investigation into the collapse of UST and LUNA began in May 2022, with the US Department of Justice (DOJ) launching a probe into the matter. The investigation led to charges being filed against Do Kwon and other executives at Terraform Labs in October 2022.
As part of the plea agreement, Kwon admitted to conspiring to defraud investors and committing wire fraud. He also agreed to forfeit a significant amount of assets, including millions of dollars in cryptocurrency.
The Consequences of the Fraud
The consequences of the fraud are far-reaching and devastating. Thousands of investors lost significant amounts of money as a result of the collapse of UST and LUNA. Many of these investors were ordinary people who had invested their life savings in the cryptocurrencies, hoping to make a profit.
The collapse of UST and LUNA also had significant implications for the global financial markets. The value of other cryptocurrencies plummeted, and the stability of the financial system was called into question.
What’s Next for Do Kwon?
With his guilty plea, Do Kwon has admitted to his role in the fraud and has agreed to cooperate with investigators. However, the consequences of his actions are far from over.
Kwon faces a maximum sentence of 25 years in prison, although he may be able to reduce his sentence to 12 years as part of his plea agreement. He also faces the possibility of significant fines and forfeiture of his assets.
The case is likely to have significant implications for the cryptocurrency industry as a whole. It highlights the need for increased transparency and accountability in the management of cryptocurrencies, and serves as a warning to other entrepreneurs and investors in the industry.
Conclusion
The case of Do Kwon and the collapse of UST and LUNA is a sobering reminder of the risks and consequences of investing in cryptocurrencies. While the cryptocurrency market has the potential to be incredibly lucrative, it is also fraught with risk and volatility.
As the market continues to evolve and mature, it is essential that investors and entrepreneurs alike are aware of the risks and take steps to mitigate them. The case of Do Kwon serves as a warning to anyone involved in the industry, and highlights the need for increased transparency and accountability.
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