Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
The world of cryptocurrency has seen its fair share of ups and downs, but few events have been as devastating as the collapse of TerraUSD (UST) and Luna in 2022. The once-promising cryptocurrencies lost a staggering $40 billion (nearly ₹3.5 lakh crore) in value, leaving investors reeling. At the center of this debacle was South Korean entrepreneur Do Kwon, dubbed by some as the “Cryptocurrency King”. Now, Kwon has pleaded guilty to conspiracy to defraud and wire fraud, admitting to his role in the massive fraud.
Kwon, who co-founded Terraform Labs, the company behind TerraUSD and Luna, faced 25 years in prison for his crimes. However, with his admission of guilt, his sentence may be reduced to 12 years. The plea deal is a significant development in the ongoing legal proceedings against Kwon, who has been at the center of a global investigation into the collapse of TerraUSD and Luna.
TerraUSD (UST) was launched in 2020 as a stablecoin, designed to maintain a stable value pegged to the US dollar. Luna, on the other hand, was an algorithmic cryptocurrency that was meant to be used as a reserve currency for TerraUSD. The two cryptocurrencies were marketed as a revolutionary new way to invest in cryptocurrency, with Kwon touting them as a way to “democratize” access to finance.
However, things took a turn for the worse in May 2022, when the value of TerraUSD began to plummet. As the stablecoin’s value fell, investors scrambled to sell their Luna tokens, leading to a massive selloff that wiped out the value of both cryptocurrencies. The collapse was so sudden and devastating that it sent shockwaves through the global financial system, with investors worldwide losing billions of dollars.
The investigation into the collapse of TerraUSD and Luna was launched shortly after the event, with authorities in South Korea, the United States, and other countries joining forces to uncover the truth behind the debacle. Kwon, who had gone into hiding following the collapse, was eventually arrested in March 2022.
The charges against Kwon were significant, with the US Department of Justice accusing him of conspiracy to commit wire fraud, securities fraud, and commodities fraud. The indictment alleged that Kwon had made false and misleading statements about the value and stability of TerraUSD and Luna, as well as the company’s financial health.
Kwon’s legal team had argued that he was not guilty of the charges, claiming that he had acted in good faith and had not intentionally defrauded investors. However, with his plea deal, Kwon has effectively admitted to his role in the fraud.
The implications of Kwon’s guilty plea are far-reaching, not just for the cryptocurrency community but for the broader financial industry. The collapse of TerraUSD and Luna was a wake-up call for regulators and investors alike, highlighting the need for greater oversight and transparency in the cryptocurrency space.
As the investigation into the collapse of TerraUSD and Luna continues, investors are left to pick up the pieces and wonder what could have been done differently. The story of Do Kwon and Terraform Labs serves as a cautionary tale about the dangers of unchecked ambition and the importance of regulatory oversight in the rapidly evolving world of cryptocurrency.
