Do Kwon, the founder of Terraform Labs, was arrested by the Montenegrin authorities on March 24, 2023. This arrest is related to an investigation into allegations of tax evasion, money laundering, and other alleged financial crimes. Billions of dollars of losses are at stake.
โ To the moon, to the prison โ. This is how Do Kwon's career is summed up. Now he is part of the crypto legend. The economic media had made hot throats of the South Korean almost a year ago. He is back in the news today in an amazing new story. In a tweet, Filip Adzic (Minister of the Interior of Montenegro) commented that โ Yoone of the world's most wanted fugitives has been arrested in Podgarica (Editor's note: capital of Montenegro)โ. The government member continues โ Montenegrin police have arrested a person believed to be one of the most wanted fugitives, South Korean national Do Kwon, co-founder and CEO of Singapore-based Terraform Labs. The man was reportedly caught with his CFO, Hon Chang Joon.
Do Kwon is behind one of the biggest crashes in the short history of cryptocurrencies and one of the reasons for the current bear market. Initially, Do Kwon was a respected and admired character. He was the president and founder of Terraform Labs, one of the most prominent blockchain and cryptography companies in recent years. she offered a insolent profitability thanks to the TerraUSD stablecoin and its Luna token. On trading platforms (= exchange) or specialized in earning (= earning interest on custody of a crypto asset), Terra Luna and UST (= TerraUSD) attracted small and large investors from all over the world.
Lured by a juicy APR (annualized rate of return), millions of investors have saved the Luna Cryptocurrency and above all his TerraUSD stablecoin, is supposed to be as stable as the dollar. Faced with a slow market, Terraform Labs promised to make big and fast. With TerraUSD pegged to the dollar, the very beginning of a stablecoin, investors thought they had found the golden goose. The company claimed that its UST (TerraUSD) was backed by crypto, including 80,000 bitcoins.
Exclusive Images: Do Kwon and Han Chang-joon leave the Montenegrin court in handcuffs pic.twitter.com/IwTnyUpLRS
โIsabel Hunter (@isabelhunter) March 24, 2023
TerraUSD, the algorithmic stablecoin
This stablecoin model stood out in the cryptosphere for being an algorithmic stablecoin. In other words, it was not directly correlated to the dollar. An algorithm constantly balanced the number of tokens in circulation. Basically, we sold Terra Luna when the price of TerraUSD fell, and vice versa. On paper, it was a marvel of disruptive blockchain technology. But in May 2022, this stablecoin went from 9my range of the largest capitalizations to that of 173. In a few days, assets worth several billion euros disappeared in a few days. Bloody raid by big whales (companies that handle huge capital) or FUD snowball effect (Fear, Uncertainty and Doubt = "fear, uncertainty and doubt"), we will probably never know the end of the story.
Either way, Luna crashed causing TerraUSD to delink (de-index with the dollar). altcoins like bitcoins, the entire crypto market collapsed into the abyss. The extent of the losses linked to the Terra Luna project is now estimated at $500 billion. All protocols, cryptos or platforms have suffered an unprecedented earthquake. Most held, but others, such as the Arrows Capital investment fund or the Celsius Network lending platform, were swept away by the submerged wave. Not to mention the small investors (how many French?) who lost all their savings overnight.
Manhunt for a Crypto Outcast
Do Kwon was the most hated man in the cryptocurrency world even before the accident. he was swinging Twitterโ I don't argue with the poor"or mocked" 95% of cryptocurrency projects will fail โ. Hateful and capricious pseudo-genius, he was even threatened with death. 4,000 people collectively organized to find it in the world. To make matters worse, SBF (Samuel Bankman-Fried), former head of FTX, would have precipitated the fall of Terraform Labs tokens, as we learned a few months after the Terra accident.
Do Kwon had done his mea culpa and promised compensation. The South Korean authorities initially let him go. Under international pressure, they were searching for him and had even issued arrest warrants for the 31-year-old. The man remained curiously untraceable, as he indicated on Twitter that he would not be on the run. We thought we had seen it in Singapore, Dubai, Russia, Azerbaijan, the Seychelles, or even Serbia. He finally went to a country bordering Serbia where he was expelled.
The Minister of the Interior continues on Twitter: The former โking of cryptocurrenciesโ, responsible for losses of more than 40 billion dollars, was detained at the Podgorica airport with forged documents. We are awaiting official confirmation of identity. Do Kwon was not the subject of an international warrant, but rather an Interpol Red Notice issued by the South Korean authorities in September 2022. Subsequently, the SEC (Securities and Exchange Commission) filed a complaint in a New York court in February 2023. The equivalent of our Autoritรฉ des Marchรฉs Financiers said in a press release: โwe allege that Terraform and Do Kwon failed to provide full, fair, and truthful disclosure to the public as needed for a multitude of crypto asset securities, including LUNA and Terra USD [โฆ]. We also allege that they committed a fraud by repeating false and misleading statements to build confidence before causing devastating losses to investors.โ Clearly, the US financial police accuse Terraform Labs and its leader of having repeatedly defrauded investors and not of having sunk Terra Luna and TerraUSD in May 2022.
Finally together โค๏ธ#DoKwon pic.twitter.com/HPBWJEIGq4
โ MEMePOOL (@GatewayMeme) March 23, 2023
Do Kwon caught with false documents from various countries
According to the Montenegrin authorities, Do Kwon was in possession of forged documents from costa rica that he intended to use to get to Dubai. Of fake Belgian official documents they were also found on the young man. The Seoul office of Interpol has confirmed the identity of the South Korean engineer. After the Korean complaints, that of the SEC, a criminal complaint for the criminal offense of forgery of a document was filed with the court of first instance in Podgorica. But South Korea also seeks to repatriate him to stand trial. In fact, there is a multilateral extradition agreement between South Korea and Montenegro. For now, Do Kwon and his CFO are in custodyaccording to the court of Podgorica.
For French investors, this is a hopeful beginning to understand what really happened in May 2022. Do Kwon's arrest is a further illustration of the authorities' determination to fight these financial crimes. The US desire to regulate cryptocurrencies is not unrelated to the Terraform affair.
