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, who co-founded Terraform Labs and was behind the cryptocurrencies TerraUSD (UST) and Luna (LUNA), faces a maximum sentence of 25 years in prison. However, with his guilty plea, his sentence may be reduced to 12 years.
The news of Kwon’s guilty plea comes as a major blow to the cryptocurrency world, which was rocked by the collapse of UST and LUNA in 2022. The collapse led to a loss of nearly ₹3.5 lakh crore, making it one of the largest financial frauds in history.
For the uninitiated, Do Kwon was a rising star in the cryptocurrency world, known for his charismatic persona and innovative ideas. He co-founded Terraform Labs in 2018, which developed the UST stablecoin, designed to peg its value to the US dollar. The stablecoin was marketed as a safer alternative to other cryptocurrencies, which were known for their volatility.
UST’s success was meteoric, with its value surging to over $18 billion in 2022. However, the bubble burst in May 2022, when the stablecoin’s value began to plummet. The collapse was swift and devastating, wiping out nearly 90% of UST’s value in a matter of hours. The fallout was catastrophic, with investors losing billions of dollars and the cryptocurrency market plunging into chaos.
Kwon and his team had claimed that UST was backed by a reserve of $3 billion, but it was later revealed that the reserve was illusory and that the stablecoin was not backed by any real assets. The collapse of UST led to a domino effect, causing the value of LUNA to plummet as well.
The aftermath of the collapse was marked by widespread criticism of Kwon and his team, who were accused of running a Ponzi scheme. The collapse also led to a massive sell-off in the cryptocurrency market, with many investors losing their life savings.
In the wake of the collapse, Kwon and his team went into hiding, sparking a global manhunt. Kwon was eventually arrested in Montenegro in March 2023, where he was held for several months before being extradited to the United States.
The US Department of Justice (DOJ) had charged Kwon with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit securities fraud. The charges carried a maximum sentence of 25 years in prison.
Kwon’s guilty plea marks the end of a long and dramatic saga. The entrepreneur’s fall from grace is a cautionary tale about the dangers of unchecked ambition and the importance of transparency and accountability in the cryptocurrency market.
The news of Kwon’s guilty plea has sent shockwaves through the cryptocurrency world, with many industry experts and investors expressing relief that justice has been served. The collapse of UST and LUNA was a major blow to the cryptocurrency market, which is still recovering from the fallout.
As the cryptocurrency market continues to evolve, the Kwon saga serves as a reminder of the importance of regulatory oversight and the need for greater transparency and accountability. The collapse of UST and LUNA was a wake-up call for the industry, which must learn from the mistakes of the past to build a safer and more sustainable future.
