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, who was behind the cryptocurrencies TerraUSD (UST) and Luna (LUNA) that lost a whopping $40 billion (nearly ₹3.5 lakh crore) in 2022, co-founded Terraform Labs and faced a possible 25 years in prison. However, with his admission of guilt, his sentence may be reduced to 12 years.
Do Kwon’s downfall began in May 2022 when the value of UST, a stablecoin designed to maintain a stable value pegged to the US dollar, collapsed. This led to a massive sell-off in LUNA, another cryptocurrency created by Kwon’s company, Terraform Labs. The sudden and catastrophic failure of both cryptocurrencies led to a loss of over $40 billion, making it one of the largest implosions in the history of cryptocurrencies.
The TerraUSD (UST) collapse had far-reaching consequences, with many investors, including retail traders and institutional investors, losing significant amounts of money. The event also sparked widespread criticism of Kwon and his company, with many accusing him of being reckless and irresponsible in his handling of the cryptocurrencies.
In the aftermath of the collapse, Kwon went into hiding, and his whereabouts became a subject of intense speculation. His disappearance sparked concerns about the safety of his investors’ funds and the potential for further financial losses.
In October 2022, Kwon was arrested by South Korean authorities and charged with conspiracy to defraud and wire fraud. The charges were brought forth by the US Department of Justice, which alleged that Kwon knowingly engaged in a scheme to defraud investors and laundered millions of dollars in ill-gotten gains.
Kwon’s decision to plead guilty has significant implications for his future and the future of his investors. If his sentence is reduced to 12 years, as expected, he will still face a significant amount of time in prison. However, his admission of guilt may also pave the way for his investors to recover some of their losses.
The TerraUSD and Luna collapse has also led to a renewed focus on the regulatory and oversight of the cryptocurrency industry. Many experts have called for greater transparency and accountability in the industry, citing the Kwon case as a prime example of the risks and dangers associated with unregulated cryptocurrency trading.
In a statement, a spokesperson for the US Department of Justice said, “Do Kwon’s guilty plea today marks a significant milestone in our efforts to hold him accountable for his alleged crimes. We will continue to work tirelessly to ensure that he faces the full consequences of his actions.”
Kwon’s fall from grace is a sobering reminder of the risks and uncertainties associated with investing in cryptocurrencies. While some investors may have seen the TerraUSD and Luna collapse as an opportunity to make quick profits, others have lost significant amounts of money and are still reeling from the aftermath.
As the cryptocurrency industry continues to evolve and mature, it is essential that investors and regulators alike take heed of the lessons learned from the Kwon case. Greater transparency, accountability, and oversight are needed to ensure that the risks associated with cryptocurrency trading are minimized and that investors are protected from fraudulent activities.
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