The Man Behind the Hype
1๏ธโฃ Who is Do Kwon?
- Name: Do Kwon
- Nationality: South Korean ๐ฐ๐ท
- Net Worth: Over $3 billion ๐ฐ
- Education: Degree in Computer Science from Stanford University ๐
- Career: Former software engineer at Apple and Microsoft ๐๐ผ
2๏ธโฃ Terraform Labs: The Beginning
- Founded: 2018 by Do Kwon
- Funding: Raised $32 million + $25 million from Binance, Coinbase, Arrington XRP, and Polychain ๐ฆ
- Purpose: To power various stablecoins and the now-infamous LUNA token ๐
3๏ธโฃ The Birth of TerraUSD (UST)
- Year: 2020
- Type: Algorithmic stablecoin pegged to the U.S. dollar ๐ต
- Mechanism: Backed by the LUNA token to maintain the stablecoin's value ๐
The Domino Effect: Unveiling the Collapse
4๏ธโฃ First Signs of Trouble
- Date: May 2021
- Event: UST fell from its peg for the first time ๐
- Action: Secret deal with Jump Trading to purchase UST until it restored peg ๐ค
5๏ธโฃ Misleading Tactics
- Deception: Terraform artificially mirrored Chai transactions to create the impression of legitimate traffic ๐ฆ
- Quote: Kwon suggested they create โfake transactions that look real,โ and promised to โtry my best to make it indiscernible.โ ๐ญ
6๏ธโฃ The Bet
- Confidence: Kwon accepted a $1M bet that LUNA wouldn't fall and offered a bet that UST wouldn't depeg ๐
The Crash: A Detailed Account
7๏ธโฃ The Trigger
- Event: May 2022, Terra's Anchor Protocol started reducing interest rates on stablecoin deposits ๐ฆ
8๏ธโฃ The Exodus
- Result: Decline in the number of lenders, causing exits from UST ๐ช
9๏ธโฃ The Mechanism Failure
- Issue: The burn-and-mint mechanism for swapping UST for LUNA faced technical issues, leading to paused withdrawals ๐
- Outcome: Dilution of the LUNA token supply, causing its price to drop ๐
๐ The Final Blow
- Factor: Automated mechanism at Curveโs pool created more discounts to incentivize arbitrage traders โ๏ธ
- Effect: UST lost its peg to the dollar, and the price of LUNA plummeted ๐
Aftermath and Allegations
1๏ธโฃ1๏ธโฃ BTC Transfers
- Action: Do Kwon transferred over 10,000 BTC into a cold wallet, with over $100 million withdrawn via the Swiss bank ๐จ๐ญ
1๏ธโฃ2๏ธโฃ Secret Transfers
- Allegation: Secret statements claim Kwon transferred more than 40,000 BTC from the burn wallet to secret wallets ๐
- Response: Kwon denied these allegations ๐ซ
1๏ธโฃ3๏ธโฃ Arrest
- Location: Montenegro ๐ฒ๐ช
- Event: Do Kwon and Terra's CFO arrested while attempting to board a flight to Dubai with falsified travel documents โ๏ธ
- Legal: SEC and Prosecutors seek his extradition โ๏ธ
Fun Facts and Opinions
1๏ธโฃ4๏ธโฃ Fun Facts
- Investment: Montenegrin Prime Minister invested $75,000 to acquire 750k LUNA before the crash, which could have been worth $90M ๐ธ
- Naming: Do Kwon named the Terra blockchain's stablecoin "LUNA" after his daughter ๐
1๏ธโฃ5๏ธโฃ Your Thoughts?
- Question: Do you believe the SEC will find the lost billions and return the money to investors? ๐ค
- Call to Action: Share your opinion in the comments! ๐จ๏ธ
---
The rise and fall of Do Kwon and his cryptocurrency ventures offer a gripping tale of ambition, deception, and downfall. The impact of the LUNA and UST collapse serves as a stark reminder of the volatility and risks inherent in the crypto world. What are your thoughts on this saga?
