Article Details

Crypto crasher Do Kwon admits guilt over failed not-so-stablecoin that erased $41 billion. Tells court 'What I did was wrong and I want to apologize for my conduct'. Terraform Labs founder Do Kwon has pled guilty to committing fraud when promoting the so-called "stablecoin" Terra USD and now faces time in jail. Kwon was a pioneer of “stablecoins” – cryptocurrencies tied to the value of a fiat currency. In theory, one of Kwon’s “UST” tokens would always be worth US$1. Stablecoins are a useful idea because current tools for moving money can be slow and expensive. Backers of stablecoins imagined greasing the wheels of commerce by using blockchains to enable faster money transfers. The concept of tokenized assets stored on blockchains is now generally accepted in financial services circles, which no longer consider them terrifying so long as they’re properly operated, governed, and secured. Terraform Labs was not well operated or governed and the complex scheme it used to maintain the value of UST failed. Investors saw over $40 billion go up in smoke. Kwon is a South Korean citizen, and Terraform Labs called Singapore home. As the company fell apart, he disappeared and authorities in both countries tried to track him down. The crypto-crasher holed up in Montenegro where he ran into trouble for travelling on a fake passport. Local authorities eventually approved his extradition to the USA, where he found himself in federal court but initally denied the charges against him. The former crypto-baron clearly changed his mind and decided some of his actions were indefensible, as on Tuesday he pled guilty to one count of conspiring to commit commodities fraud, securities fraud, and wire fraud; and one count of committing wire fraud in connection with fraudulent schemes at Terraform. Kwon reportedly told the Southern District of New York “In 2021, I made false and misleading statements about why [TerraUSD] regained its peg,” then admitted “What I did was wrong and I want to apologize for my conduct.” According to the US Justice Department, Kwon agreed to forfeit over $19 million that he earned from his schemes, and faces up to 25 years jail. Sentencing will take place in December. Maybe Kwon will find himself sharing a cell with former FTX boss Sam Bankman-Fried, another crypto-crook whose elaborate attempts to remake the financial system collapsed after he committed fraud.