- Founder of now collapsed stablecoin Terra Luna, Do Kwon, finally arrested; authorities claim he has not been fully identified.
- The Securities and Exchange Commission accused Do Kwon of a fraud scheme involving billions.
- Terra Luna’s collapse had a hand in the major decline of the crypto space in 2022
- Could Terra Luna’s collapse have been a scam rug pull?
The founder of collapsed Stablecoin, Terra, Do Kwon has been accused by authorities of using his stablecoin to run a $40 billion fraud scheme.
Does Kwon was charged with eight counts of fraud by federal prosecutors in the Southern District of New York, including wire fraud, commodities fraud, securities fraud, and an alleged conspiracy to defraud and engage in market manipulation?
The founder of Terra was hit with these charges shortly after his alleged arrest in Montenegro, Kwon, which was rumored to be on the run since the collapse of Terra/Luna.
The collapse was one of the significant downsides that affected the crypto ecosystem last year and with claims by the Securities Exchange Commission that the failure of the stablecoin constituted a fraud scheme that carted away $40 billion in value.
In 2022, Terra Luna collapsed and dragged down its sister token, TerraUSD, which was stable. Terra Luna had gone from an impressive $120 per token to a zero. The downfall could be attributed to a joint panic selling after its depositors lost their trust in Terra and all sold their coins simultaneously, causing it to dip badly.
Terra Luna faced a total collapse by the second week of May 2022. While the founder, Do Kwon, had held onto the potential of the blockchain space and decided to split the stablecoin after its collapse and relaunch as Terra 2.0.
Terra 2.0 main focus is using Luna to earn rewards for staking or purchasing digital art and payment of fees. Does Kwon was still hit with charges, the biggest being the SEC accusing him of a $40 billion fraud scheme?
Terra Luna’s collapse was responsible for wiping almost half a trillion US dollars from crypto. This massive loss had a hand in the decline that the cryptocurrency industry faced for a large part of 2022. There were also rumors claiming that the collapse of Terra Luna was a rug-pull scam, hence why Do Kwon was accused of scamming users and depositors.
Conclusion
Do Kwon’s charges and arrest were first reported through social media by the Montenegro minister of the interior filip adzic on Twitter, and while more information is yet to come out, a news outlet in South Korea reported that the Korean police confirmed that they had checked his identity and were able to ensure that the person who had been arrested was indeed Do Kwon.
While the SEC accused the founder of the fraud scheme, nothing is entirely sure yet.
