Do Kwon

Kwon Do-Hyung (born September 6, 1991), more commonly known as Do Kwon, is a South Korean former businessman and software engineer.

He was the co-founder and CEO of Terraform Labs, the parent company of crashed stablecoin TerraUSD and cryptocurrency Luna.

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.

Kwon faces legal and social pressure regarding his role in the Terra crash.

Citizens from various jurisdictions — including South Korea, Singapore, and the United States — are taking legal action against Kwon.

On 23 March 2023, Kwon was arrested in Montenegro, while attempting to travel to Dubai using falsified documents.

Following his arrest, he was charged by a US federal grand jury of eight counts, including securities fraud, commodities fraud, wire fraud, and conspiracy.

Do Kwon was born in Seoul, South Korea, on 6 September 1991.

He attended Daewon Foreign Language High School in Seoul.

After receiving his BS in computer science from Stanford University in 2015, he transitioned to work briefly as a software engineer for both Microsoft and Apple.

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

It was later discovered that the same company at which he served as CEO had received approximately $600,000 worth of government funding during its initial stages despite a conflict of interest as the funding was approved through a Korean incubator company run by one of the co-founder's parents.

Furthermore, internal investigations from the Korean Ministry of SMEs and Startups revealed that the company had received failing grades on initial evaluation reports and that five counts of inappropriate use of funding on personnel expenses was found, although the amount has reported to have been retrieved by the Ministry.

Do Kwon co-founded Terraform Labs Pte.

Ltd. in January 2018 with entrepreneur Daniel Shin.

Later in 2018, Terraform Labs released a cryptocurrency called Luna.

Terraform began selling its stablecoin, TerraUSD (UST), in 2020.

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.

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.

The value of Luna eventually reached over $116 in April 2022.

During his time at Terraform Labs, Kwon also worked on various blockchain projects, including Mirror, Prism, Astroport, and Anchor.

The Mirror token, known as MIR, runs on a decentralized finance platform related to Terra.

MIR allows people to disregard current restrictions on stocks and other assets by making it easier to create and trade synthetic versions.

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.

However, the release of Luna 2.0, now called LUNA on trading platforms, drew pushback from investors and critics.

As a result of the crash, TerraUSD and Luna are now referred to as TerraClassicUSD and LUNC, respectively.

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.

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.

Despite Terraform Labs being based in Singapore, TerraUSD falls under SEC's regulations as Americans bought the token to fund businesses or seek profit.

In February 2023, the SEC charged Kwon and Terraform Labs with fraud.

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.

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.

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.

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.

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.

Kwon responded by stating that he wouldn't comply with the demands and instead would be suing the SEC. 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 which was approved on 4 May 2022.

Beginning on 9 May 2022, Terraform Labs made headlines after UST started to break its peg to the US dollar.

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."

The collapse wiped out almost $45 billion of market capitalization in one week.