Crypto King’ Do Kwon, behind TerraUSD & Luna, pleads guilty to ₹3.5-lakh-crore fraud
In a stunning turn of events, South Korean entrepreneur Do Kwon, known as the ‘Cryptocurrency King’ by some, has pleaded guilty to conspiracy to defraud and wire fraud. Kwon, the co-founder of Terraform Labs, was behind the cryptocurrencies TerraUSD (UST) and Luna, which lost a staggering $40 billion (approximately ₹3.5 lakh crore) in 2022. His admission has significant implications, as it may reduce his prison sentence from 25 years to 12 years.
The collapse of TerraUSD and Luna sent shockwaves through the cryptocurrency market, leaving many investors reeling. The sudden and unprecedented drop in value of these digital currencies led to widespread financial losses, and many speculated that the collapse was the result of insider trading and market manipulation.
Kwon’s guilty plea comes at a critical moment, as the cryptocurrency market is still reeling from the aftermath of the TerraUSD and Luna collapse. His admission has sparked a wave of emotions among investors who lost money in the debacle, with many calling for greater regulation and oversight of the cryptocurrency market.
So, what led to Kwon’s guilty plea, and what does it mean for the future of cryptocurrency?
The Rise and Fall of TerraUSD and Luna
TerraUSD, also known as UST, was a stablecoin pegged to the US dollar. It was designed to maintain a stable value of $1, with the aim of providing a more stable alternative to other cryptocurrencies. Luna, on the other hand, was the native cryptocurrency of the Terra blockchain and was used to vote on proposals and govern the network.
The two cryptocurrencies gained significant traction in the cryptocurrency market, with UST becoming one of the most widely used stablecoins. However, in May 2022, the value of UST began to fluctuate wildly, eventually losing its peg to the US dollar. The collapse of UST sparked a chain reaction, causing the value of Luna to plummet as well.
The collapse of TerraUSD and Luna was catastrophic, with many investors losing significant amounts of money. The exact amount of losses is still unclear, but it is estimated that the collapse resulted in losses of over $40 billion (approximately ₹3.5 lakh crore).
Investigation and Charges
In the aftermath of the collapse, investigators began to scrutinize the activities of Terraform Labs and its co-founders, including Do Kwon. The investigation revealed that Kwon and his team had engaged in a number of illegal activities, including conspiracy to defraud and wire fraud.
In October 2022, Kwon was charged with conspiracy to defraud and wire fraud by the US Department of Justice. The charges alleged that Kwon and his team had engaged in a scheme to defraud investors and manipulate the market price of TerraUSD and Luna.
Guilty Plea and Sentence
Kwon’s guilty plea comes after months of negotiations with prosecutors. His admission has significant implications, as it may reduce his prison sentence from 25 years to 12 years.
Under the terms of his plea agreement, Kwon will be sentenced to 12 years in prison, with five years of supervised release. He will also be required to pay a fine of $50 million and forfeit $100 million.
Implications for the Cryptocurrency Market
Kwon’s guilty plea has significant implications for the cryptocurrency market. His admission has sparked a wave of emotions among investors who lost money in the debacle, with many calling for greater regulation and oversight of the cryptocurrency market.
The collapse of TerraUSD and Luna has also raised questions about the sustainability of the cryptocurrency market. The market has long been plagued by volatility and speculation, and the collapse of these two cryptocurrencies has highlighted the risks associated with investing in cryptocurrencies.
Conclusion
Do Kwon’s guilty plea is a significant development in the ongoing saga of the TerraUSD and Luna collapse. His admission has sparked a wave of emotions among investors and has raised questions about the sustainability of the cryptocurrency market.
As the cryptocurrency market continues to evolve, it is clear that greater regulation and oversight are needed to protect investors and prevent future collapses. Kwon’s guilty plea is a reminder of the risks associated with investing in cryptocurrencies and highlights the need for greater transparency and accountability in the industry.
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