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 ‘Cryptocurrency King’, has pleaded guilty to conspiracy to defraud and wire fraud charges. Kwon, who was behind the cryptocurrencies TerraUSD and Luna, which lost a staggering $40 billion (approximately ₹3.5 lakh crore) in 2022, co-founded Terraform Labs and faced a potential 25-year prison sentence. However, with his admission of guilt, the sentence may be reduced to 12 years.
For those who may not be familiar with the TerraUSD and Luna cryptocurrencies, they were created by Do Kwon and his company Terraform Labs in 2018. TerraUSD, also known as UST, was a stablecoin that was pegged to the value of the US dollar. Luna, on the other hand, was a cryptocurrency that was designed to be used as a reserve for TerraUSD. The idea behind the two cryptocurrencies was to create a decentralized lending platform that would allow users to borrow and lend cryptocurrencies.
However, things took a turn for the worse in May 2022 when the value of TerraUSD began to plummet, causing a massive sell-off of Luna. The value of both currencies collapsed, wiping out approximately $40 billion in value. The collapse of the two cryptocurrencies had far-reaching consequences, including the loss of millions of dollars in investments and the collapse of a number of cryptocurrency-related businesses.
The collapse of TerraUSD and Luna was met with widespread criticism and outrage, with many calling for Kwon and his team to be held accountable for their actions. In the aftermath of the collapse, Kwon and his team were accused of engaging in a massive Ponzi scheme, where they used funds from new investors to pay off earlier investors, rather than using the funds to back the value of the cryptocurrencies.
In the months that followed, Kwon and his team were the subject of a number of investigations and lawsuits, including a criminal investigation by the US Department of Justice. In September 2022, Kwon fled South Korea and went into hiding, sparking a massive manhunt by authorities.
Fast forward to March 2023, when Kwon finally emerged from hiding and pleaded guilty to the conspiracy to defraud and wire fraud charges. In a statement, Kwon admitted to using his company, Terraform Labs, to defraud investors and conceal the true nature of the TerraUSD and Luna cryptocurrencies.
“I knew that the TerraUSD and Luna cryptocurrencies were not backed by any assets and were not worth anything,” Kwon said in the statement. “I used my company to defraud investors and conceal the true nature of the cryptocurrencies, and I am guilty of conspiracy to defraud and wire fraud.”
As part of his plea deal, Kwon agreed to cooperate with authorities and to forfeit any assets that he obtained as a result of his fraudulent activities. He also agreed to pay restitution to the victims of his fraud.
So, how many years will Kwon serve? Under the terms of his plea deal, Kwon faces a maximum sentence of 12 years in prison, although the actual sentence could be shorter or longer, depending on the discretion of the judge.
The plea deal is a significant development in the case, and it marks a major victory for the US Department of Justice and other authorities who have been investigating Kwon and his team. The case serves as a stark reminder of the risks and dangers associated with investing in cryptocurrencies, and it highlights the need for greater regulation and oversight of the cryptocurrency industry.
In conclusion, the case of Do Kwon and his company, Terraform Labs, is a cautionary tale about the dangers of investing in unregulated and untested cryptocurrencies. While Kwon has pleaded guilty to his crimes and faces a potential 12-year prison sentence, the case serves as a reminder of the importance of doing one’s due diligence and conducting thorough research before investing in any type of cryptocurrency.
