‘Terra Luna Crisis’ Kwon Do-hyung
Kwon Do-hyeong (32), who was arrested in Montenegro on the 23rd (local time), was once a promising player in the virtual currency industry. After graduating from Stanford University’s Department of Computer Science, he interned at Microsoft and Apple. He came to Korea in 2018 and founded ‘Terraform Labs’, a virtual currency company. In 2019, Forbes listed him as one of the ’30 Asian Leaders Under 30′. Bloomberg introduced it as ‘the world’s most notable bitcoin whale (large investor)’ in April of last year.
Then, in May of last year, with the collapse of Terra and Luna, the evaluation of Mr. Kwon changed 180 degrees. From ‘Korean version of Elon Musk’ to ‘virtual currency scammer’.
Terra USD (Tera) is a stablecoin issued by Kwon through Terraform Labs. Stablecoin refers to a currency whose value fluctuates less because it is linked to a legal currency such as the dollar. Kwon also issued Luna, a sister coin, to ensure the value of Terra. Terraform Labs paid an annual interest of 20% in coins when Terra was deposited. Investors flocked to the high yield. Terra’s popularity soared on the virtual currency warm wind that began in 2020. In April of last year, Luna’s value rose to $119.
However, the situation changed when the virtual currency market froze. The value of Terra, which had been skyrocketing in May of last year, began to decline. When the value of Terra fell below $1, Terraform Labs tried to support the falling Terra price by issuing large amounts of Luna. The increase in Luna’s currency led to a decrease in its value. The value of Terra, which is linked to Luna, also plummeted. The situation escalated out of control when Luna owners went on a sell-off. Luna’s market capitalization, which was close to 50 trillion won in early April of last year, shrank to 600 billion won on May 12, a month later. On May 13 last year, Binance, the world’s largest virtual currency exchange, decided to delist Luna.
After the collapse, Mr. Kwon said, “I am sorry to all those who suffered because of me. I also lost all my property,” he promised to resolve the situation. However, as a result of an investigation by the US Securities and Exchange Commission (SEC), it was revealed that he had siphoned off hundreds of billions of won in bitcoin even before Terra and Luna collapsed.
In September of last year, the court issued an arrest warrant for Kwon on charges of violating the Capital Markets Act. At the same time, Interpol also issued a ‘red notice’ and pursued him.
Kwon, who had been on the run, was arrested in Montenegro after 11 months.
