Celsius

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<p class="has-drop-cap">Do Kwon’s Terra (LUNA) was the vanguard that preceded the largest string of crypto busts during 2022, from Celsius to 3AC and FTX. After his arrest in Montenegro, what resolution can be expected as two countries make their case to extradite and put him on trial? According to WSJ, Mr. Kwon could face up to <a aria-label="forty years (opens in a new tab)" href="https://www.wsj.com/articles/south-korean-prosecutor-calls-for-crypto-entrepreneur-do-kwon-to-face-charges-in-home-country-639f5515" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">forty years</a> in prison.</p> 
<h3 id="recap-of-the-terra-downfall">Recap of the Terra Downfall</h3> 
<p>When Terra crashed in May 2022, it was trending to be one of the top blockchain networks behind Ethereum. Much of its popularity came from the novel dynamic between Terra (LUNA), the network’s native cryptocurrency, and TerraUSD (UST) stablecoin.&nbsp;</p> 
<p>The latter was algorithmically pegged to LUNA, wherein smart contracts constantly readjusted the supply of UST/LUNA depending on the demand for both. For instance, if the price of LUNA went up, the algorithm would reduce UST supply with a buyback of UST with LUNA. Therefore, decreasing the price of UST so the peg to the dollar would be stabilized.</p> 
<p>As this concept eliminated the reliance on traditional banks as stablecoin reserve custodians, it seemed to push the DeFi envelope of innovation. Moreover, Terra’s lending protocol Anchor contributed hugely to attracting investors, as it offered up to 20% yields for UST deposits.</p> 
<p>Yet, after the Fed began its hiking cycle, it came<a href="https://tokenist.com/luna-drops-50-in-a-day-as-ust-peg-fails/" rel="dofollow" class="deco-link"> crashing down</a>. TerraUSD lost its peg, despite the planned deployment of Bitcoin reserves to shore up the stablecoin. Within three short days, the entire Terra ecosystem wiped out nearly $45 billion of wealth.</p> 
<h3 id="from-honest-mistake-to-suspected-malfeasance">From ‘Honest Mistake’ to Suspected Malfeasance</h3> 
<p>After Terra’s crash in May 2022 took authorities three months to begin viewing the founder, Do Kwon, as a criminal. Before that, Terra’s meltdown was primarily seen as a failed experiment. On September 26, 2022, Interpol issued a ‘red notice’ for Do Kwon, the South Korean co-founder of Terraform Labs.</p> 
<p>Following the South Korean arrest warrant for fraud and breach of capital market laws, the’ red notice’ alerted law enforcement agencies worldwide to apprehend him. This was when the incongruity of Kwon’s statements began to kick in fully.</p> 
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<p>Surprisingly, Kwon even appeared on <a aria-label=" (opens in a new tab)" href="https://www.youtube.com/watch?v=RgYSJVC7Ps8" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">Unchained Podcast</a> a month later, claiming that the charges were “politically motivated.” Fast forward to March 2023, and Do Kwon, alongside Hang Chang-joon, Terraform Labs co-founder, were finally apprehended in Montenegro’s capital Podgorica, having been caught with multiple counterfeit passports.&nbsp;</p> 
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   <p lang="en" dir="ltr">Exclusive footage —- Do Kwon and Han Chang-joon leaving Montenegrin court in handcuffs <a href="https://t.co/IwTnyUpLRS" target="_blank" rel="nofollow">pic.twitter.com/IwTnyUpLRS</a></p>— Isabel Hunter (@isabelhunter) <a href="https://twitter.com/isabelhunter/status/1639303145770876931?ref_src=twsrc%5Etfw" target="_blank" rel="nofollow">March 24, 2023</a>
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<h3 id="is-extradition-to-south-korea-imminent">Is Extradition to South Korea Imminent?</h3> 
<p>In addition to South Korean authorities, the US Securities and Exchange Commission (SEC) <a aria-label=" (opens in a new tab)" href="https://www.sec.gov/litigation/complaints/2023/comp-pr2023-32.pdf" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">sued Do Kwon</a> for multiple violations in February:</p> 
<ul> 
 <li>Fraudulent scheme to mislead investors.</li> 
 <li>Painting UST as stable while secretly colluding with a third party to buy massive amounts of UST to restore the peg a year before the crash happened in May 2021.</li> 
 <li>They were selling unregistered securities and security-based swaps.</li> 
</ul> 
<p>The South Korean charges follow a similar line. In short, Do Hyeong Kwon (31) allegedly concocted the Terra ecosystem to siphon investor inflows. This would be similar to how Sam Bankman-Fried used the FTX’s FTT token to falsify the exchange’s valuation, among <a href="https://tokenist.com/ftx-chief-engineer-pleads-guilty-to-fraud-and-conspiracy-charges/" rel="dofollow" class="deco-link">multiple other fraud charges</a> to which his associates had already pleaded guilty.</p> 
<p>It is now a matter of extraditing Do Kwon to either the US or South Korea, as he is still locked up in Podgorica, Montenegro. In a recent interview <a aria-label="to WSJ (opens in a new tab)" href="https://www.wsj.com/articles/south-korean-prosecutor-calls-for-crypto-entrepreneur-do-kwon-to-face-charges-in-home-country-639f5515" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">with WSJ</a>, the head of South Korean prosecutors, Dan Sung-han, believes justice would be best served on home grounds.</p> 
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 <p><em>“Given the nature of this incident, we think investigating the case in South Korea would be the most efficient way of bringing justice”</em></p> 
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<p>After all, Kwon’s other associates and collected evidence are already in South Korea. If the prosecution successfully delivers the extradition and the case, Do Kwon could receive up to 40 years.&nbsp;</p> 
<p>This would be in line with another convicted fraudster, Kim Jae-Hyun, the CEO of Optimus Asset Management. He was sentenced to 40 years for investment fraud in July 2022.</p> 
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<p><strong><em>Do you think Do Kwon had honest intentions initially, which fouled later? Let us know in the comments below.</em></strong></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/do-kwon-could-face-40-years-in-prison-if-extradited-to-south-korea-report/">Do Kwon Could Face 40 Years in Prison if Extradited to South Korea: Report</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Do Kwon Could Face 40 Years in Prison if Extradited to South Korea: Report

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