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Do Kwon

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In this Korean name, the family name is Kwon.
Do Kwon
Born
Kwon Do-Hyung

(1991-09-06) 6 September 1991 (age 33)
NationalitySouth Korean
EducationDaewon Foreign Language High School
Alma materStanford University
OccupationCryptocurrency developer
Known forTerra blockchain[1]
Korean name
Hangul
Hanja
權渡衡
Revised RomanizationGwon Do-hyeong
McCune–ReischauerKwŏn Tohyŏng

Kwon Do-Hyung[2] (Korean: 권도형), more commonly known as Do Kwon, is the South Korean co-founder and CEO of Singapore-based Terraform Labs, the parent company of crashed stablecoin TerraUSD and cryptocurrency Luna.[3] TerraUSD and Luna collapsed in May 2022, wiping out almost $45 billion market capitalization in one week and causing hundreds of billions in losses in the larger crypto market.[4][3][5] Kwon faces legal and social pressure regarding his role in the Terra crash.[6][7] Citizens from various jurisdictions — including South Korea, Singapore, and the United States — are taking legal action against Kwon.[4][8][9][10]

Education and early career

According to his tweet on 6 September 2021, Do Kwon was born in Seoul, South Korea, on that same day in 1991.[11][12] He attended high school at Daewon Foreign Language High School in South Korea.[12] After receiving his BS in computer science in 2015 at Stanford University, he transitioned to work briefly as a software engineer for both Microsoft and Apple.[13]

In January 2016, Kwon returned to South Korea to develop and found his startup, Anyfi.[14]

Career

Terraform Labs

Do Kwon co-founded Terraform Labs Pte. Ltd. in January 2018 with entrepreneur Daniel Shin.[15][16] Later in 2018, Terraform Labs released a cryptocurrency called Luna.[3] Terraform began selling its stablecoin, TerraUSD (UST), in 2020.[3][4] The Terra blockchain, which includes both UST and Luna, had stable mining incentives that were purported to create an elastic monetary policy alongside an efficient fiscal policy to counteract potential low adoption and limited use cases.[3] The UST stablecoin used an algorithm linked to the Luna supply to maintain a value of around $1, unlike other coins that are pegged to cash.[3] The value of Luna eventually reached over $116 in April 2022.[3]

During his time at Terraform Labs, Kwon also worked on various blockchain projects, including Mirror, Prism, Astroport, and Anchor.[17] The Mirror token, known as MIR, runs on a decentralized finance platform related to Terra.[18][19] MIR allows people to disregard current restrictions on stocks and other assets by making it easier to create and trade synthetic versions.[18][19]

Following the crash of sister currencies Luna and TerraUSD in May 2022, Terraform Labs began trading a new cryptocurrency termed Luna 2.0 in June 2022.[3] However, the release of Luna 2.0, now called LUNA on trading platforms, drew pushback from investors and critics.[3] As a result of the crash, TerraUSD and Luna are now referred to as TerraClassicUSD and LUNC, respectively.[3]

Regulatory issues

The U.S. Securities and Exchange Commission (SEC) began an investigation of Terraform Labs in June 2022 to determine if the marketing of the TerraUSD stablecoin violated federal regulations on securities and investment products.[20][21] Following the crash in May 2022, the SEC investigation seeks to determine whether TerraUSD and its underlying algorithms worked as marketed or if it violated federal investor protection regulations.[20][21] Despite Terraform Labs being based in Singapore, TerraUSD falls under SEC's regulations as Americans bought the token to fund businesses or seek profit.[20] In February 2023, the SEC charged Kwon and Terraform Labs with fraud.[22]

On 17 May 2022, members of the Korean parliament and government authorities called for a potential parliamentary hearing regarding Terraform Labs and its founder Kwon, citing the lack of regulatory framework as the main reason for the impeded investigation on the events that took place.[23][24][25]

On 18 May 2022, following investigations led by the National Tax Service of Korea, Terraform Labs founders Kwon and Daniel Shin were asked to pay additional taxes worth approximately $100 million in December 2021.[26] However, the two founders refused to pay on the grounds that the subsidiaries Terraform Labs Pte. Ltd. (Singapore) and Terraform Labs Virgin Islands are not Korean entities.[26] Regardless, the National Tax Service has claimed that since "the founders had made practical management decisions" during their time as official residents in Korea, the transfer of funds between the subsidiaries and their profits made by each entity need to obey Korean jurisdiction.[26][27][28]

Before the SEC investigation regarding TerraUSD, the U.S. Securities and Exchange Commission issued a subpoena to Terraform Labs and Kwon in 2021, specifically regarding Terraform Labs' "Mirror Protocol" that designed and offered financial derivatives that virtually "mirrored" listed stocks.[29] Kwon responded by stating that he wouldn't comply with the demands and instead would be suing the SEC.[19] Despite Kwon's attempts to dispute and avoid investigations from the SEC, a U.S. Court hearing in Manhattan in February 2022 ruled in favor of the SEC's right to continue its investigation into Kwon and Terraform Labs.[citation needed] According to documents filed by Kwon at the Supreme Court of Korea's Registry Office, Kwon filed to dissolve the company's Korean entity on 30 April 2022 and was approved on 4 May 2022.[30][31][32][33][34][35]

Collapse of Terra blockchain

Beginning on 9 May 2022, Terraform Labs made headlines after UST started to break its peg to the US dollar.[citation needed] Over the next week, the price of UST plunged to 10 cents, while Luna fell from an all-time high of $119.51 to "virtually zero."[36] The collapse wiped out almost $45 billion of market capitalization in one week.[5]

The Terra blockchain began its collapse on 7 May 2022 when several prominent investors sold over $285 million worth of UST.[citation needed] On 8 May 2022, the value of UST hit a low of $0.985, and the Luna Foundation Guard (LFG), created to be a reserve for Luna, loaned a total of $1.5 billion to defend the peg and subside the volatility of UST.[37]

The crash contributed to hundreds of billions of dollars lost across the crypto ecosystem.[4]

Class actions

With approximately 200,000 South Korean Luna investors harmed by the crash,[38] groups of Korean investors announced that they would be filing a class-action lawsuit against Terraform Labs.[39] The South Korean government also announced that it would pursue Cofounder Kwon on criminal charges.[39] As of 17 May, more than 1,600 investors have signed up for the lawsuit with domestic law firms LKB & Partners LLC and Kisung LLC.[40][9][10][41][42][35]

In the United States, a class action, Patterson v. TerraForm Labs Pte Ltd. et al., was filed against Kwon and others in the United States District Court for the Northern District of California on 17 June 2022.[43][44] Briefs are being presented to the United States District Court for the Northern District of California under the counsel of Scott + Scott Attorneys at Law LLP, The Rosen Law Firm PA, Kahn Swick Foti LLP, and Bragar Eagel & Squire P.C., accusing Do Kwon and Terraform Labs of soliciting unregistered securities while misleading investors about their viability.[8]

In September 2022, a $56.9 million class action was filed at the High Court of Singapore against Kwon, Terraform Labs, Nikolaos Alexandros Platias and the Luna Foundation Guard.[45]

In February 2023, US financial regulators charged Do Kwon and TerraForm Labs with "orchestrating a multi-billion dollar crypto asset securities fraud".[46]

Arrest

On 21 June 2022, YTN reported that prosecutors were looking to invalidate Kwon's South Korean passport.[47] On 14 September 2022, a South Korean court issued an arrest warrant for Kwon and five others on allegations of violations of Korean capital markets law.[48][49][50] The prosecutor's office said all six individuals were located in Singapore.[48] On 19 September 2022, the Seoul Southern District Prosecutors' Office said they had begun the procedure to place Kwon on the Interpol red notice list and revoke his passport.[51] In December 2022, South Korean authorities shared their belief that Kwon was hiding in Serbia, as this country doesn't have an extradition treaty with South Korea.[52]

On 23 March 2023, Kwon was arrested at Podgorica Airport in Montenegro, while attempting to travel to Dubai using falsified Costa Rican documents.[53][54] Following his arrest, he was charged by a federal grand jury in Manhattan of eight counts, including securities fraud, commodities fraud and wire fraud and conspiracy.[55]

Personal life

Kwon named his daughter Luna, announcing the birth in April 2022 by tweeting, "My dearest creation named after my greatest invention."[56]

On 12 May 2022, an individual investor who claims to have lost approximately $2 million allegedly trespassed into Kwon’s high-rise condominium building to demand an apology.[57][58][59][60][61] As a result, Kwon’s wife filed and requested emergency police protection, and South Korean police began investigating the incident.[62][59][57]

In October 2022, during an interview with Unchained Podcast, Kwon was asked about the invalidation of his South Korean passport by the South Korean government, to which he responded "Oh, I'm not using it anyway, so it doesn't, I can't see how that makes a difference to me."[63] When asked if he had another passport, Kwon said he wasn't comfortable answering questions related to that or his travel plans.[63]

Recognition

References

  1. ^ "Terra stablecoin crash casts spotlight on ecosystem". Emerald Expert Briefings. oxan–es (oxan–es). 1 January 2022. doi:10.1108/OXAN-ES270251. Retrieved 13 July 2022.
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  3. ^ a b c d e f g h i j "Their cryptocurrencies crashed the market. Now they're back at it". Washington Post. ISSN 0190-8286. Retrieved 3 November 2022.
  4. ^ a b c d "The Real Reasons Behind the Crypto Crash, and What We Can Learn from Terra's Fall". Time. Retrieved 3 November 2022.
  5. ^ a b Miller, Hannah (13 May 2022). "Terra $45 Billion Face Plant Creates Crowd of Crypto Losers". www.bloomberg.com. Retrieved 4 November 2022.
  6. ^ "Terra Co-Founder Do Kwon Faces $57M Class-Action Lawsuit in Singapore". sports.yahoo.com. Retrieved 3 November 2022.
  7. ^ Hooyeon, Kim; Sangmi, Cha (15 September 2022). "Terra Founder Kwon Under More Pressure From Crypto Collapse . On March 23 2023, Do Kwon was arrested at a Montenegro Airport". Bloomberg. Retrieved 2 November 2022. {{cite web}}: line feed character in |title= at position 62 (help)CS1 maint: url-status (link)
  8. ^ a b "Counsel Vie for Lead Appointment in Terraform Securities Litigation - Tech". Law Street Media. 23 August 2022. Retrieved 3 November 2022.
  9. ^ a b Cho, A-ra (18 May 2022). "'변호사도 당했다' 루나 투자 피해자들 집단소송 움직임" [‘Even Lawyers were Harmed’ Class-action Lawsuit from Harmed Luna Investors Gathers Momentum]. The Chosun Ilbo ChosunBiz (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  10. ^ a b Kang, Kwang-woo (18 May 2022). "병나발 오열 부른 60조 증발…'코인' 법률 없다, 권도형 처벌은" [As Billions Disappear into Thin Air, Investors Seek Legal Penalties on Kwon Despite Lack of Legal Framework for ‘Coins’]. JoongAng Ilbo (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  11. ^ Kwon, Do. "Tweet by Do Kwon Sep 6, 2021". Twitter. Retrieved 3 November 2022.{{cite web}}: CS1 maint: url-status (link)
  12. ^ a b "The LUNAtics aren't so crazy about Do Kwon anymore". koreajoongangdaily.joins.com. 20 May 2022. Retrieved 3 November 2022.
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  15. ^ a b "Do Kwon". Forbes. Retrieved 3 November 2022.
  16. ^ Kim, Hooyeon; Kim, Sohee (21 July 2022). "Terra Co-Founder's Home Raided as Korea Widens Crypto Probe". Bloomberg. Retrieved 3 November 2022.
  17. ^ Shen, Muyao; Regan, Michael P. (19 April 2022). "King of the 'Lunatics' Becomes Bitcoin's Most-Watched Whale". Bloomberg. Retrieved 17 May 2022.
  18. ^ a b "Mirror Protocol suffers $2 million exploit after $90 million stolen in October". The Record by Recorded Future. 1 June 2022. Retrieved 5 November 2022.
  19. ^ a b c Michaels, Dave (25 October 2021). "Cryptocurrency Company Snared in SEC Dragnet Sues Regulator". The Wall Street Journal. Retrieved 14 May 2022.
  20. ^ a b c Robinson, Matt (9 June 2022). "SEC Investigating UST Stablecoin Blowup in Fresh Threat to Terra". www.bloomberg.com. Retrieved 4 November 2022.
  21. ^ a b Evans, Brian. "The SEC is investigating if TerraUSD's marketing violated investor protection regulations, report says". Markets Insider. Retrieved 4 November 2022.
  22. ^ "SEC charges Do Kwon, Terraform with fraud in connection with Terra collapse". CNBC. Retrieved 16 February 2023.
  23. ^ "파악도 안 된 '테라·루나 사태'…국회, 권도형 청문회 부른다" [Far from Comprehending ‘Luna and Terra Crisis’, Parliament to Call Do Kwon to a Public Hearing]. JTBC (in Korean). 18 May 2022. Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  24. ^ Lee, Jee-young (17 May 2022). "국회, 루나 사태 '청문회' 추진...'권도형 출석시켜야'" [Parliament Pushes to Call for Public Hearing on Do Kwon Amid Luna Crisis]. Korea Economic Daily (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  25. ^ Cho, A-ra (18 May 2022). "각계 비난 불구 루나 2.0 내겠다는 권도형...청문회 열리나" [Do Kwon Urges on Starting Luna 2.0 Despite Wide Criticism, a Public Hearing is Called For]. The Chosun Ilbo IT Chosun (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  26. ^ a b c Park, Jin-woo (18 May 2022). "'루나 사태' 권도형·테라폼랩스, 1000억대 세금 추징당했다" [Kwon Do-hyung and Terraform Labs were Taxed an Additional $100M]. Korea Economic Daily (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  27. ^ Jeong, Hae-yong (18 May 2022). "국세청, 세금 탈루한 '루나 사태' 권도형·테라폼랩스에 수백억원대 세금 추징" [Internal Revenue Service Taxes Do-Hyung Kwon and Terraform Labs for Evaded Taxes]. The Chosun Ilbo ChosunBiz (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  28. ^ Kwak, Min-Seo; Kim, Yoo-a (18 May 2022). "국세청, '루나 사태' 테라폼랩스·권도형 수백억원대 세금 추징" [IRS Serves Do-hyung Kwon and Terraform Labs Penalty Taxes Worth Millions]. Yonhap News Agency (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  29. ^ "SEC Files Subpoena Enforcement Action Against Terraform Labs and Its CEO". U.S. Securities and Exchange Commission. Retrieved 11 May 2022.
  30. ^ Kang, Jin-kyu (13 May 2021). "권도형 테라 사태 예견?...폭락 직전 테라폼랩스 한국법인 해산" [Did Kwon Do-hyeong Predict the Terra Incident? Terraform Labs' Korea Corporation Disbanded Just Before the Crash.]. DigitalToday (in Korean). Archived from the original on 13 May 2022. Retrieved 13 May 2022. {{cite web}}: |archive-date= / |archive-url= timestamp mismatch; 15 May 2022 suggested (help)
  31. ^ Kim, Jeong-suk (13 May 2022). "루나 창업자 권도형은 어디에…11일 투자독려 트윗 후 행방묘연" [Where Is Luna Founder Kwon Do-hyung? After the Tweet Encouraging Investments on the 11th, His Whereabouts Are Unknown]. Maeil Business Newspaper (in Korean). Archived from the original on 16 May 2022. Retrieved 15 May 2022.
  32. ^ Son, Seok-woo (16 May 2022). "[이슈분석] 'K-코인' 루나·테라 사태에 가상자산 '쇼크'…영향은?" [[Issue Analysis] Aftermaths of the ‘K-Coin’, Luna and Terra Crisis and the Cryptocurrency’Shock’]. Seoul Broadcasting System (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  33. ^ Jung, Jeong-wook (16 May 2022). "루나, 99% 대폭락…거래소서 퇴출 잇달아" [Luna Falls 99%, Leading to Continued Delistings]. The Dong-a Ilbo (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  34. ^ "루나-테라 폭락에 투자자 모였다…'고소 진행 중'" [Class-action Lawsuit Against Terra Looming as Harmed Investors Gather]. The Financial News (in Korean). 17 May 2022. Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  35. ^ a b Jin, Min-ji (18 May 2022). "Luna's Do Kwon may face legal peril, some attorneys argue". Korea JoongAng Daily. Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  36. ^ Jagtiani, Sunil (12 May 2022). "Terraform Again Halts Blockchain Behind UST Stablecoin, Luna". www.bloomberg.com. Retrieved 4 November 2022.
  37. ^ "Luna Foundation Guard". lfg.org. Retrieved 4 November 2022.
  38. ^ 고병준 (17 May 2022). "(LEAD) S. Korea looks into cryptocurrency market following TerraUSD, Luna crash". Yonhap News Agency. Retrieved 3 November 2022.
  39. ^ a b "Do Kwon's Other Legal Headache: A $57 Million Fraud Lawsuit in Singapore". WSJ. Retrieved 3 November 2022.
  40. ^ "루나-테라 폭락에 투자자 모였다…'고소 진행 중'" [Class-action Lawsuit Against Terra Looming as Harmed Investors Gather]. The Financial News (in Korean). 17 May 2022. Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  41. ^ Kim, Bo-hyung (18 May 2022). "루나 투자자들 집단소송 나서는데…권도형 '연 7% 수익 새 코인 만들 것'" [Amid Harmed Investors Gathering for a Class-action Lawsuit, Kwon Claims to ‘Create a New Coin with 7% Annual Yield’]. Korea Economic Daily (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  42. ^ Hwang, Jae-ha (18 May 2022). "루나·테라 피해자들, 권도형 고소·재산 압류 신청 예정" [Harmed Luna and Terra Investors to File for Lawsuit and Seizure of Property]. Yonhap News Agency (in Korean). Archived from the original on 18 May 2022. Retrieved 18 May 2022.
  43. ^ "Patterson v. TerraForm Labs Pte Ltd. et al (3:22-cv-03600), California Northern District Court". www.pacermonitor.com. Retrieved 3 November 2022.
  44. ^ "Patterson v. TerraForm Labs Pte Ltd. et al". PacerMonitor. Retrieved 18 June 2022.
  45. ^ "Terra co-founder Do Kwon faces $79.8m lawsuit in Singapore after crypto crash". The Straits Times. 8 November 2022. Retrieved 9 November 2022.
  46. ^ "Do Kwon: US regulator charges cryptocrash boss with fraud". BBC News. 17 February 2023. Retrieved 17 February 2023.
  47. ^ "Korea Bans Terraform Employees From Leaving Country Amid Probe". Bloomberg News. 21 June 2022. Retrieved 21 June 2022.
  48. ^ a b "Terra Co-Founder Do Kwon Faces Arrest Warrant in South Korea". Bloomberg News. 14 September 2022. Retrieved 14 September 2022.
  49. ^ "South Korea court reportedly issues arrest warrant for Terraform founder Do Kwon". CNBC. Retrieved 14 September 2022.
  50. ^ Young, Jin Yu (26 September 2022). "Interpol Issues 'Red Notice' for South Korean Crypto Founder Do Kwon". The New York Times. ISSN 0362-4331. Retrieved 3 November 2022.
  51. ^ "South Korean prosecutors ask Interpol to issue red notice for Do Kwon". Financial Times. Retrieved 19 September 2022.
  52. ^ "S Korea says crypto-fugitive Do Kwon is in Serbia". BBC News. Retrieved 12 December 2022.
  53. ^ "US charges crypto fugitive Do Kwon after Montenegro arrest". Financial Times. Retrieved 23 March 2023.
  54. ^ "Crypto Fugitive Do Kwon Is Arrested in Montenegro and Charged With Fraud in US". Bloomberg News. Retrieved 23 March 2023.(subscription required)
  55. ^ "Do Kwon Charged With Fraud by US Prosecutors in New York". Bloomberg News. Retrieved 23 March 2023.(subscription required)
  56. ^ Yaffe-Bellany, David (18 May 2022). "How a Trash-Talking Crypto Founder Caused a $40 Billion Crash". The New York Times. New York. Retrieved 18 May 2022.
  57. ^ a b "'루나 사태' 무단침입 BJ "물의 죄송…권도형 대표 사죄해야"" [Trespasser of Kwon's High-Rise Apologizes But Demands Apology From Kwon]. The Dong-a Ilbo (in Korean). 16 May 2022. Archived from the original on 16 May 2022. Retrieved 18 May 2022.
  58. ^ "'루나 사태'에 대표 집 벨 누른 BJ "권도형 사죄해야"" [Trespasser of Kwon Do-hyung's High-Rise Demands Apology From Kwon]. Korea Economic Daily (in Korean). 16 May 2022. Archived from the original on 16 May 2022. Retrieved 18 May 2022.
  59. ^ a b Hetzner, Christiaan (13 May 2022). "Luna founder's wife under emergency protection after crypto market death spiral plunges coin to $0". Fortune. Archived from the original on 16 May 2022. Retrieved 16 May 2022.
  60. ^ ""지푸라기라도 잡고자"… '루나' 권도형 집 찾아갔던 BJ" ['I Was Desperate' Trespasser of Kwon Do-hyung's Residence]. Kukmin Ilbo (in Korean). 15 May 2022. Archived from the original on 16 May 2022. Retrieved 18 May 2022.
  61. ^ Kim, Han-joo (16 May 2022). "Crypto investor probed over allegedly visiting house of Terraform's CEO". Yonhap News Agency. Archived from the original on 18 May 2022. Retrieved 16 May 2022. {{cite web}}: |archive-date= / |archive-url= timestamp mismatch; 16 May 2022 suggested (help)
  62. ^ "권도형 아내도 '루나 공포'…괴한 침입에 '긴급신변보호' 요청" [Kwon Do-hyung's Wife Files for Emergency Police Protection upon Encountering Residence Trespasser]. The Dong-a Ilbo (in Korean). 13 May 2022. Archived from the original on 16 May 2022. Retrieved 18 May 2022.
  63. ^ a b Do Kwon of Terra: 'It Was Never Really About Money or Fame or Success' - Ep. 408, retrieved 2 December 2022
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