Who is Do Kwon, the “king of cryptocurrencies” whose scams add up to $40 billion in losses?

On Thursday the 23rd, alerts went off at the Podgorica airport, the capital of Montenegro, with an arrest. “The Montenegrin police detained a wanted fugitive, it is the South Korean citizen Do Kwon, co-founder and CEO of the company based in Singapore Terraform Labs”, the Minister of the Interior, Filip Adzic, announced a little later on his social networks.

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The “king of cryptocurrencies” had fallen while trying to flee once more.

At the time of his arrest, Kwon was carrying two false passports, one Costa Rican and the other Belgian. Next to him, in addition, was Hon Chang Joon, financial director of Terraform, who had the same false documents as Kwon.

A scan of their fingerprints confirmed the identity of both detainees, who have been wanted by Interpol since September 2022 at the request of the South Korean justice system.

Kwon and Chang were transferred to the Prosecutor’s Office, where it was learned that they planned to travel on a private plane to Dubai and denied being fugitives from justice in their country. Both are charged by Montenegro with falsification of travel documents.

However, that would be the least of his problems.

YOUNG TALENT

Originally from Seoul, Kwon Do-hyung studied Computer Science at the prestigious Stanford University, before going to work for Microsoft and Apple as a systems engineer.

In 2015, he founded Anyfi, a ‘startup’ that sought to democratize Internet access by making the user’s signal act as connection nodes.

However, it would not be until 2018, when he would co-found Terraform Labs, the company that would lead him to be known globally. His company was based on two cryptocurrencies: TerraUSD and Luna.

The first was a ‘stablecoin’; that is, it was supported by a physical monetary fund, while the second was used for exchange through a blockchain chain with which Kwon assured that it would “change the world.”

The young man called those who accompanied him on this adventure “lunatics” -in reference to the name of the cryptocurrency- and it was not long before prominent media began to label him a genius, while large companies bet millions on him.

In 2019, the prestigious Forbes magazine included it in its famous “30 under 30” list, while companies such as Binance, Arrington XRP or Polychain Capital contributed close to 32 million dollars in funds for the company.

With the founding of Terraform Labs, Kwon came to be considered a brilliant new mind in the field of technology.

FALL FROM GRACE

At its peak, Luna was worth $119 a unit. Currently, its price is US$0.000128.

The crash occurred in May 2022, in the midst of the fall of cryptocurrencies, but Luna’s fall was so great that its investors panicked and sold all they had, leading to a great crisis in the sector.

The situation led to companies such as Voyager Digital, Celsius, Sam Bankman-Fried’s FTX or Three Arrows Capital going bankrupt.

The problem with TerraUSD was that, unlike the rest of the ‘stablecoins’, it was supported by an algorithmic process that did not allow it to function as a backup in the face of the first crisis in the sector, explained the Fitch Ratings bank in a note published a few days later.

The collapse of the two Kwon cryptocurrencies led to the market falling by $200 billion in 24 hours.

Kwon reacted to the situation by declaring himself “disheartened by the pain that my invention has caused everyone.”

However, after a few months it disappeared.

The collapse of Terra and Luna led to the cryptocurrency market falling by $200 billion in just 24 hours. (INA FASSBENDER / AFP /)

RED CIRCULAR

In September last year, Interpol received a request from the South Korean court against Kwon and five of his associates, accusing them of implementing a pyramid scheme in which investors are paid alleged profits that are actually funds from subsequent investors.

The Singaporean authorities, where the Terraform Labs operations center is located, notified that Kwon was no longer in the country.

By December, Seoul suspected Kwon was in Serbia.

In February, the United States Securities and Exchange Commission also filed charges against Do Kwon for “failing to provide his investors with truthful and sufficient information about his company’s operations,” which they consider a fraud that would have operated between 2018 and the 2022.

With all these charges, added to those that have been presented in Singapore, where the company was established, Interpol issued a red notice that ended up leading to the arrest of Kwon in Montenegro.

Courts in the United States, South Korea and Singapore have requested Kwon’s extradition. (AFP Agency /)

Source: Elcomercio