Crypto World’s Most Hated Man Arrested

Do Kwon, the founder of Terraform Labs, was arrested by authorities in Montenegro on March 24, 2023. This arrest is related to an investigation into allegations of tax evasion, money laundering and other suspected financial crimes. Billions of dollars of loss are at stake.

” To the moon, to the prison “. This is how to sum up Do Kwon’s career. He is now 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 a new incredible story. In a tweet, Filip Adzic (Minister of Interior of Montenegro) commented that ” Ione of the world’s most wanted fugitives has been arrested in Podgarica (Editor’s note: capital of Montenegro)”. The member of the government continues “ Montenegrin police have arrested a person believed to be one of the most wanted fugitives, South Korean citizen 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 cryptos and one of the reasons for the current bear market. Initially, Do Kwon was a respected and admired figure. He was the president and founder of Terraform Labs, one of the most prominent blockchain and crypto companies of 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 the custody of a crypto asset), Terra Luna and UST (= TerraUSD) attracted small and large investors from all over the world.

Enticed by a juicy APR (annualized rate of return), millions of investors have saved the Luna cryptocurrency and especially his stablecoin TerraUSD, supposed to be as stable as the dollar. Faced with a sluggish market, Terraform Labs promised to earn a lot and quickly. With a TerraUSD pegged to the dollar – the very principle of a stablecoin – investors thought they had found the goose that lay the golden eggs. The company claimed that its UST (TerraUSD) was backed by cryptos, including 80,000 bitcoins.

Exclusive footage —- Do Kwon and Han Chang-joon leaving Montenegrin court in handcuffs pic.twitter.com/IwTnyUpLRS

—Isabel Hunter (@isabelhunter) March 24, 2023

TerraUSD, the algorithmic stablecoin

This stablecoin model stood out in the cryptosphere since it was an algorithmic stablecoin. In other words, it was not directly correlated with 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 9^e rank of the largest capitalizations to that of 173. In a few days, assets worth several billion euros disappeared in a few days. Bloody raid of big whales (companies managing enormous 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 collapsed causing TerraUSD to depeg (de-index with the dollar). Altcoins like bitcoin, the whole crypto market then collapsed into the abyss. The extent of the losses linked to the Terra Luna project is now estimated at 500 billion dollars. All protocols, cryptos or platforms have suffered an unprecedented earthquake. Most held, but others such as the investment fund Three Arrows Capital or the Celsius Network lending platform were swept away by the overwhelming wave. Not to mention the small investors (so how many French people?) who lost all their savings overnight.

Manhunt for a Crypto Outcast

Do Kwon was the most hated man in the crypto world even before the crash. He was swinging on Twitter” I don’t argue with the poor” or taunted “ 95% of cryptocurrency projects will fail “. An odious and whimsical pseudo-genius, he was even threatened with death. 4,000 people organized themselves collectively to find him in the world. To top it off, SBF (Samuel Bankman-Fried), former boss of FTX would have precipitated the fall of Terraform Labs tokens, we learned a few months after the Terra crash.

Do Kwon had made his mea culpa and promised compensation. The South Korean authorities initially let him go. Under international pressure, they were looking for him and had even filed arrest warrants against the 31-year-old man. The man remained curiously untraceable as he indicated on Twitter not to be on the run. We thought we had seen it in Singapore, Dubai, Russia, Azerbaijan, the Seychelles, or even Serbia. It was finally in a country bordering Serbia that he was flushed out.

The Minister of the Interior continues on Twitter: The former “cryptocurrency king”, who is responsible for losses of more than 40 billion dollars, was detained at Podgorica airport with falsified documents. We are awaiting official confirmation of the identity. Do Kwon was not the subject of an international warrant, but ofan Interpol red notice issued by the South Korean authorities in September 2022. The SEC (Securities and Exchange Commission) subsequently filed a complaint in a New York court in February 2023. The equivalent of our Financial Markets Authority declared in a press release : “We allege that Terraform and Do Kwon Failed to Provide Full, Fair, and Truthful Disclosure to the Public as required for a multitude of crypto asset securities, including LUNA and Terra USD […]. We also allege that they committed a fraud by repeating false and misleading statements to build confidence before causing devastating losses to investors.” Clearly, the American financial policeman accuses Terraform Labs and its leader of having repeatedly defrauded investors and not of having sunk Terra Luna and TerraUSD in May 2022.

Finalmente insieme❤️#DoKwon pic.twitter.com/HPBWJEIGq4

— MEMePOOL (@GatewayMeme) March 23, 2023

Do Kwon caught with fake documents from multiple countries

According to the Montenegrin authorities, Do Kwon was in possession of falsified documents from Costa Rica which he intended to use to get to Dubai. Of false Belgian official documents 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 was therefore filed for the criminal offense of falsifying a document before the court of first instance in Podgorica. But the South Korea is also seeking to repatriate him for trial. There is indeed a multilateral extradition agreement between South Korea and Montenegro. For now, Do Kwon and his financial director are in custodyaccording to the court in Podgorica.

For French investors, this is a start of hope for understanding what really happened in May 2022. According to the SEC, Do Kwon had vanished with 10,000 bitcoins, or about $250 million. Do Kwon’s arrest is a further illustration of the authorities’ determination to fight against these financial crimes. The desire to regulate cryptos by the USA is not unrelated to the Terraform affair.