US authorities accuse Do Kwon of causing a cryptocurrency crisis that led to massive investor losses. The South Korean national, linked to a $40 billion financial disaster, has been extradited to the United States after a prolonged legal battle.
Do Kwon was the CEO of Terraform Labs, which managed two cryptocurrencies—TerraUSD and Luna. Both coins collapsed in 2022, triggering a broader sell-off in the crypto market. US prosecutors claim Kwon orchestrated a “multi-billion dollar crypto asset securities fraud,” resulting in the coins’ failure.
Kwon fled South Korea after authorities issued an arrest warrant. He was later detained in Montenegro while attempting to board a flight to Dubai in March 2023. Montenegro’s Ministry of Justice recently approved his extradition, with Kwon reportedly agreeing to the decision.
Terraform Labs’ Rise and Fall
Terraform Labs gained prominence in 2021 as Luna and TerraUSD rose in popularity. Fans of Luna, known as “Lunatics,” hailed Kwon as their “king.” Despite their early success, the coins collapsed catastrophically on May 9, 2022. Luna lost over 99% of its value in just 48 hours, creating panic across the crypto sector.
Investors withdrew funds from other cryptocurrencies, fearing a similar collapse. This caused significant losses across the entire market. The broader “cryptocrash” led to an estimated $400 billion in losses. Bitcoin and other major assets also experienced sharp declines but have since recovered, with Bitcoin surpassing $100,000 per coin briefly in December 2024.
Fallout and Legal Battles
Terraform Labs filed for bankruptcy in January 2024, marking the end of its operations. Kwon’s extradition to the US concludes an 18-month-long legal saga. His case highlights the risks and regulatory challenges within the volatile world of cryptocurrency.