Terra Luna Collapses: The Ups and Downs of Do Kwon's Life

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Few people in the crypto industry have stirred the community as much as Do Kwon (Kwon Do-hyung). Since Terra Luna reached a market capitalization of $60 billion, only to collapse in just a few days – both the founder and the project have been caught in a legal whirlwind.

From Stanford To Stablecoin Ambition

Born in 1991 in Seoul, Do Kwon graduated from Stanford (2015) with a degree in Computer Science. Initially, he started his career with Anyfi (mesh Wi-Fi), but later discovered a gap in the crypto payment industry and co-wrote a whitepaper on algorithmic stablecoins with Nicholas Platias.

In 2018, Do Kwon partnered with Daniel Shin to establish Terraform Labs, launching the LUNA token. In 2020, UST – Terra's algorithmic stablecoin – was released with a “unique” stabilization mechanism: the price of UST is pegged to LUNA rather than real assets.

The Brilliant Exchange and the Strong Fall

Rig UST promises high yield through Anchor Protocol, causing LUNA to surge – over 3 billion USD in Bitcoin was stored to “protect” UST. But when the sell-off occurred in May 2022, UST lost its peg, LFG had to sell a huge amount of Bitcoin, spilling the entire market.

The market capitalization of Terra Luna has fallen freely from $60 billion. Do Kwon, once estimated to have assets worth billions of USD, now has only about $135 million as of July 2023(.

International Warrants and Legal Surprises

Main time:

  • September 2022: South Korea issued an arrest warrant
  • February 2023: SEC sues for securities fraud
  • March 2023: Arrested in Montenegro with a fake passport while preparing to board a private jet to Dubai.
  • June 2023: Detained pending extradition request from South Korea

Currently, Do Kwon is facing fraud lawsuits from both the US and South Korea. The collapse of Terra Luna not only wiped out his assets but also left a cautionary lesson: algorithmic stablecoins that are not backed by real assets are a filter skewed towards loss.

The Story Afterwards

Terra 2.0 was launched to “restore” confidence, but the recovery journey is still long. Do Kwon is currently awaiting extradition decision – the next step will determine both his future and the legacy of Terra.

LUNA-4.22%
BTC-1.58%
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