The Man Behind the Hype
1️⃣ Who is Do Kwon?
- Name: Do Kwon
- Nationality: South Korean 🇰🇷
- Net Worth: Over $3 billion 💰
- Education: Degree in Computer Science from Stanford University 🎓
- Career: Former software engineer at Apple and Microsoft 🍏💼
2️⃣ Terraform Labs: The Beginning
- Founded: 2018 by Do Kwon
- Funding: Raised $32 million + $25 million from Binance, Coinbase, Arrington XRP, and Polychain 🏦
- Purpose: To power various stablecoins and the now-infamous LUNA token 🌐
3️⃣ The Birth of TerraUSD (UST)
- Year: 2020
- Type: Algorithmic stablecoin pegged to the U.S. dollar 💵
- Mechanism: Backed by the LUNA token to maintain the stablecoin's value 🔗
The Domino Effect: Unveiling the Collapse
4️⃣ First Signs of Trouble
- Date: May 2021
- Event: UST fell from its peg for the first time 📉
- Action: Secret deal with Jump Trading to purchase UST until it restored peg 🤝
5️⃣ Misleading Tactics
- Deception: Terraform artificially mirrored Chai transactions to create the impression of legitimate traffic 🚦
- Quote: Kwon suggested they create “fake transactions that look real,” and promised to “try my best to make it indiscernible.” 🎭
6️⃣ The Bet
- Confidence: Kwon accepted a $1M bet that LUNA wouldn't fall and offered a bet that UST wouldn't depeg 🃏
The Crash: A Detailed Account
7️⃣ The Trigger
- Event: May 2022, Terra's Anchor Protocol started reducing interest rates on stablecoin deposits 🏦
8️⃣ The Exodus
- Result: Decline in the number of lenders, causing exits from UST 🚪
9️⃣ The Mechanism Failure
- Issue: The burn-and-mint mechanism for swapping UST for LUNA faced technical issues, leading to paused withdrawals 🛑
- Outcome: Dilution of the LUNA token supply, causing its price to drop 📉
🔟 The Final Blow
- Factor: Automated mechanism at Curve’s pool created more discounts to incentivize arbitrage traders ⚙️
- Effect: UST lost its peg to the dollar, and the price of LUNA plummeted 📉
Aftermath and Allegations
1️⃣1️⃣ BTC Transfers
- Action: Do Kwon transferred over 10,000 BTC into a cold wallet, with over $100 million withdrawn via the Swiss bank 🇨🇭
1️⃣2️⃣ Secret Transfers
- Allegation: Secret statements claim Kwon transferred more than 40,000 BTC from the burn wallet to secret wallets 🔒
- Response: Kwon denied these allegations 🚫
1️⃣3️⃣ Arrest
- Location: Montenegro 🇲🇪
- Event: Do Kwon and Terra's CFO arrested while attempting to board a flight to Dubai with falsified travel documents ✈️
- Legal: SEC and Prosecutors seek his extradition ⚖️
Fun Facts and Opinions
1️⃣4️⃣ Fun Facts
- Investment: Montenegrin Prime Minister invested $75,000 to acquire 750k LUNA before the crash, which could have been worth $90M 💸
- Naming: Do Kwon named the Terra blockchain's stablecoin "LUNA" after his daughter 🌕
1️⃣5️⃣ Your Thoughts?
- Question: Do you believe the SEC will find the lost billions and return the money to investors? 🤔
- Call to Action: Share your opinion in the comments! 🗨️
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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?