ZoneBitcoin EditorialDo Kwon is the South Korean entrepreneur, founder of the company Terraform Labs, based in Singapore. The company is behind the creation of the Terra blockchain which includes the stablecoin TerraUSD (UST) as well as the crypto Luna.
Since the spectacular fall in May 2022 of these two cryptos, the founder has been under the radar of the justice system. Disappointed (and fallen too) investors are also watching him closely.
Given the scale of the disaster (a drop of more than 93% in its stablecoin UST supposed to be at a fixed parity 1:1 with the dollars), the entire crypto market was shaken by this crash.
The courts have since investigated this matter. This dizzying fall is, according to some allegations, the result of fraud and financial crimes. It was individual and institutional investors who first filed complaints against Terraform Labs. The affair then took on another dimension following the revelations of the judicial investigation.
There would be Ponzi in the air
Do Know's company is accused of running a Ponzi scheme. The profits paid were in reality the funds provided by successive investors. There fall of the UST dollars then brought down the entire pyramid.
🥴 You should know that the Ponzi scheme which consists of paying interest which comes only from new entrants is very widespread in crypto projects. THE Yield farming has a lot of similar patterns, for example. However, Ponzi schemes are so sophisticated that they may not appear so at first glance. This is what makes them difficult to recognize.
For the moment, the investigation is continuing its research into the origin of the crash even if it seems that the Anchor protocol (which paid more than 20% ofAPI) is largely responsible for the collapse of the UST.
The protocol has been greatly highlighted by many crypto influencers. This contributed to both the success and loss of Moon.
When Do Kwon's troubled past surfaces
Very often, a company has to collapse for us to begin to be interested in the past of the founders. With Luna's fall, Do Kwon's previous affairs were revealed. We notably learned that he was at the origin of the project Basic Cash created with Nader Al-Naji (founder of the social network project on the web 3 Deso). It was then his first (unsuccessful) attempt to create a algorithmic stablecoin.
Its stablecoin never reached parity with the dollar and the project collapsed, a year after its launch. Worse still, Basis Cash was in the sights of the SEC in the USA and investors had to be reimbursed.
However, being in the crosshairs of the SEC is relatively common for crypto projects. This does not make Basis Cash a scam. It is important to emphasize this. Thus, projects like Ripple (XRP) et Tether (USD) are involved in matters with the SEC for example. In general, these are mainly cases of its compliance with the law although very often it can be an elaborate scam.
Do Know wanted by Interpol
On September 19, 2022, South Korean prosecutors received an arrest warrant for Do Kwon. However, South Korea does not have an extradition agreement with Singapore. His South Korean passport is revoked. (It is unknown if Do Kwon has several passports although it seems very likely.) They asked Interpol to set up a fugitive alert to prevent any escape of Do Know from the territory. Interpol filed a red notice on September 26 against the CEO of Terralabs.
Do Know is not the only one wanted by the international police. There is also the Greek co-founder Nicholas Platias as well as four other partners and employees of the company. These allegedly violated South Korea's financial markets law.
Thus, Interpol, the international police, issued a wanted notice to more than 195 member countries of the agency.
Where is Do Kwon today?
Do Know's whereabouts are unknown, but he says he is not hiding. The police are unable to locate him. He would most likely be in Singapore and would not try to hide according to his own words...He wrote on Twitter that he was coding quietly in his living room...Moreover, he kept his Twitter account and continues to publish announcements related to Luna as if nothing had happened...If you don't know the Luna affair (how would that be possible?), you won't necessarily realize that the company was one of the biggest crashes in the history of cryptocurrencies…
On September 17, Do Know posted a tweet in which he said he was not "running from any government agency that attempted to communicate with him." He added “We are fully cooperating and have nothing to hide.”
Really?
South Korean authorities asked the platform OK and platform Kucoin to freeze the assets of 3313 BTC which would (probably therefore) belong to Do Kwon. The latter allegedly created a portfolio under the name Luna Foundation Guard (LFG) on September 15, the day after a Korean court issued an arrest warrant against him.
This operation raised a lot of questions among the community because it contradicted the claims made by Do Kwon who said that he had used all the reserve BTC to support the depeg of TerraUSD…
Could he have lied? Indeed, that’s what a lot of people think, in fact. He claimed that he had not used these exchanges for over a year and that this was the most false statement he had read on the Luna affair…
What is the future of Do Kwon and Luna?
We must wait for the end of the judicial investigation to be able to judge the situation and the sulfurous character of Do Kwon.
Recently, there has been a new wave of enthusiasm on social networks including Twitter to rise from the ashes MON, resulting from the fork of the initial blockchain. A luna coin airdrop was sent to all Luna holders to compensate for losses. The lunatics community is therefore attempting one last feat to revive the token. A new mechanism is currently being implemented to destroy (burn) part of the tokens. This would lower the circulating supply and ensure a greater value of existing tokens.
Likewise, new projects and protocols are being developed on the Terra network. This indicates new activity that could impact the future price of the crypto.
That said, it seems that this resurrection, however desired by the #lunaarmy, is not enough to erase all the liabilities of this cryptocurrency. For many people, the case is closed and nothing can help Luna get back on her feet.
—>>Read: The 5 things I learned from Luna's massacre
Should we stop idolizing the founders?
From an image point of view, Do Kwon has lost a lot of credibility with the crypto community. His sulphurous past linked to his arrogant personality and troll on social networks does not facilitate his “rehabilitation”. He is in fact considered megalomaniacal and unfit to manage a company with such great responsibilities. Was he too young and too immature? Was he just too ambitious? Or is it the too great devolution of the crypto community which saw him as a genius which caused his ego to inflate to the point of implosion?
Hard to say.
The crypto community tends to look for gurus and leaders whenever it can. Like a flock of desperate sheep looking for a shepherd. But to what extent?
We can simply remember that he is only 32 years old and being at the head of such a company worth millions can quickly make your head spin. Can we only distinguish the founder from the blockchain he created? Nothing is less certain...
That Luna will come back to life, it seems, in view of everything that has been revealed, unlikely. But, again, can we really be sure?
Read other articles:
- Lunc’s lousy resurrection? Will it (really) reach $1?
- Terra blockchain’s UST stablecoin is in turmoil
Note: There is no financial advice in this or any other article on this site. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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[…] market that never ends? Well, know that since the fall of Do Kwon's Terra blockchain, all the bankruptcies follow one another, in an ever more domino effect […]