NEW DELHI: Do Kwon, once hailed as a cryptocurrency visionary, found himself ensnared in a global chase after a catastrophic $40 billion cryptocurrency downturn. As the mastermind behind TerraUSD and Luna, two tokens whose values plummeted dramatically, Kwon became a prime target for US and South Korean law enforcement agencies.
The aftermath of this debacle not only erased billions from the crypto realm but also precipitated the collapse of numerous digital-asset businesses, leaving countless investors worldwide in financial ruin.
A dramatic turn in Montenegro
Kwon’s descent from a revered crypto pioneer to an international fugitive reached a climax in Montenegro in March. While attempting to board a private jet to Dubai, Kwon and his associate Chang-joon Han were detained at the airport. Their arrest was based on an international warrant following the collapse of two digital tokens associated with Kwon, leading to a market loss of around $40 billion.
According to a report in the Wall Street Journal, an informant’s tip to Montenegro’s interior minister, Filip Adžić, marked the end of Kwon freedom.
On March 23, Kwon and Han journeyed to the Podgorica airport, the capital of the country, a trip that typically lasts an hour. They paid their taxi driver with a hefty 4,000 euros ($4,230), an amount considerably large for the average Montenegrin.
Upon scanning Kwon’s passport, an alert was raised, leading to the detention of both him and Han. Han was discovered to be carrying a counterfeit Costa Rican passport. A thorough search of their belongings by the border police revealed three laptops, five mobile phones, and an additional set of falsified Belgian passports, the WSJ report said.
Both South Korea and the US are pushing for Kwon’s extradition from Montenegro. However, Montenegrin officials have indicated that they might only consider this after local legal proceedings conclude.
Political turmoil
His detention has sparked political turmoil in Montenegro. A letter from Kwon to the nation’s Prime Minister, Dritan Abazović, alluded to connections with Milojko “Mickey” Spajić, a politician and erstwhile Luna investor. This revelation stirred a political maelstrom, with Spajić’s political adversaries accusing him of liaisons with the notorious crypto fugitive, the WSJ report said.
Facing serious allegations
The accusations against Kwon are grave. Probes by both US and South Korean officials deduced that he had deceived investors, with growing suspicions of him secretly accumulating a vast crypto wealth. If found guilty in South Korea, he stands to receive the nation’s most stringent punishment for a financial transgression. Despite these grave charges, Kwon has consistently refuted any malfeasance. Before his apprehension, he mysteriously vanished from his opulent Singaporean home, only to mockingly engage with authorities through tweets and undisclosed interviews.
The downfall of TerraUSD
Central to Kwon’s narrative is TerraUSD, a stablecoin he ardently promoted. Distinct from other fiat-backed stablecoins, TerraUSD was an algorithmic variant, depending on sophisticated financial strategies and collective trader efforts to sustain its value. Despite cautionary voices from some crypto experts, many were lured by its vision of a revolutionary monetary system, free from the shackles of traditional banking.
However, TerraUSD’s stability was short-lived. In May 2022, its valuation began to deteriorate, instigated by substantial withdrawals from Anchor Protocol, a platform promising lucrative returns for TerraUSD deposits. Kwon’s desperate attempts to salvage it, including deploying a $3 billion reserve fund, were in vain. In a matter of days, TerraUSD’s valuation had disintegrated to a few cents, leading to widespread investor fury.
Global repercussions
The shockwaves of this crash resonated worldwide. From individual investors in Ukraine and Britain grappling with massive financial setbacks to a tragic incident in Taiwan where a man reportedly ended his life after incurring a loss of around $2 million on Luna, the impact was profound.
While Kwon indulged in a luxurious existence in Singapore, mingling with the elite and savoring life’s luxuries, his investors were left to confront their financial nightmares. His audacity shone through when he christened his newborn daughter Luna, after his plummeting cryptocurrency.
As Kwon languishes in a Montenegrin jail, the world awaits the next chapter. His saga serves as a stark reminder of the unpredictable nature of the cryptocurrency domain, underscoring the potential perils and repercussions of this rapidly evolving industry.
(With inputs from agencies)
The aftermath of this debacle not only erased billions from the crypto realm but also precipitated the collapse of numerous digital-asset businesses, leaving countless investors worldwide in financial ruin.
A dramatic turn in Montenegro
Kwon’s descent from a revered crypto pioneer to an international fugitive reached a climax in Montenegro in March. While attempting to board a private jet to Dubai, Kwon and his associate Chang-joon Han were detained at the airport. Their arrest was based on an international warrant following the collapse of two digital tokens associated with Kwon, leading to a market loss of around $40 billion.
According to a report in the Wall Street Journal, an informant’s tip to Montenegro’s interior minister, Filip Adžić, marked the end of Kwon freedom.
On March 23, Kwon and Han journeyed to the Podgorica airport, the capital of the country, a trip that typically lasts an hour. They paid their taxi driver with a hefty 4,000 euros ($4,230), an amount considerably large for the average Montenegrin.
Upon scanning Kwon’s passport, an alert was raised, leading to the detention of both him and Han. Han was discovered to be carrying a counterfeit Costa Rican passport. A thorough search of their belongings by the border police revealed three laptops, five mobile phones, and an additional set of falsified Belgian passports, the WSJ report said.
Both South Korea and the US are pushing for Kwon’s extradition from Montenegro. However, Montenegrin officials have indicated that they might only consider this after local legal proceedings conclude.
Political turmoil
His detention has sparked political turmoil in Montenegro. A letter from Kwon to the nation’s Prime Minister, Dritan Abazović, alluded to connections with Milojko “Mickey” Spajić, a politician and erstwhile Luna investor. This revelation stirred a political maelstrom, with Spajić’s political adversaries accusing him of liaisons with the notorious crypto fugitive, the WSJ report said.
Facing serious allegations
The accusations against Kwon are grave. Probes by both US and South Korean officials deduced that he had deceived investors, with growing suspicions of him secretly accumulating a vast crypto wealth. If found guilty in South Korea, he stands to receive the nation’s most stringent punishment for a financial transgression. Despite these grave charges, Kwon has consistently refuted any malfeasance. Before his apprehension, he mysteriously vanished from his opulent Singaporean home, only to mockingly engage with authorities through tweets and undisclosed interviews.
The downfall of TerraUSD
Central to Kwon’s narrative is TerraUSD, a stablecoin he ardently promoted. Distinct from other fiat-backed stablecoins, TerraUSD was an algorithmic variant, depending on sophisticated financial strategies and collective trader efforts to sustain its value. Despite cautionary voices from some crypto experts, many were lured by its vision of a revolutionary monetary system, free from the shackles of traditional banking.
However, TerraUSD’s stability was short-lived. In May 2022, its valuation began to deteriorate, instigated by substantial withdrawals from Anchor Protocol, a platform promising lucrative returns for TerraUSD deposits. Kwon’s desperate attempts to salvage it, including deploying a $3 billion reserve fund, were in vain. In a matter of days, TerraUSD’s valuation had disintegrated to a few cents, leading to widespread investor fury.
Global repercussions
The shockwaves of this crash resonated worldwide. From individual investors in Ukraine and Britain grappling with massive financial setbacks to a tragic incident in Taiwan where a man reportedly ended his life after incurring a loss of around $2 million on Luna, the impact was profound.
While Kwon indulged in a luxurious existence in Singapore, mingling with the elite and savoring life’s luxuries, his investors were left to confront their financial nightmares. His audacity shone through when he christened his newborn daughter Luna, after his plummeting cryptocurrency.
As Kwon languishes in a Montenegrin jail, the world awaits the next chapter. His saga serves as a stark reminder of the unpredictable nature of the cryptocurrency domain, underscoring the potential perils and repercussions of this rapidly evolving industry.
(With inputs from agencies)