The crypto industry is battling a serious credibility crisis this month. The crash of TerraUSD (UST), a stablecoin pegged to the US dollar, and its native token LUNA earlier this month bankrupted many investors in a matter of days and sent the crypto market into a tailspin. UST was meant to always be worth $1 but it collapsed to as low as 13 cents last week and then to 9 cents this week. The spectacular crash has led to a huge backlash from angry investors against the founder and CEO of the Terra blockchain, Do Kwon.
Who Is Do Kwon?
Do Kwon is the creator of TerraUSD and its native token Luna. However, many believed he hype and promoted a project without a firmer ground underneath. While the South Korean, who graduated from Stanford University with a degree in computer science, always carries himself with confidence, he has been especially critical of his competitors and detractors on social media. He has criticised investors for putting their money into rival stablecoin projects as well as lashing out at anyone who questioned his credentials. “Bow before the king,” he said in the tweet.
Kwon has also called UST and Luna naysayers “poor”, adding, “I don’t debate the poor”.
Following the crash of his much-publicised pet project, Do Kwon is facing legal prosecution in South Korea. Five South Korea-based crypto investors have filed criminal complaints against him and his Terraform co-founder Daniel Shin, alleging fraud and violations of financial regulations. Do Kwon is also reportedly facing a tax fine of $78 million for evading corporate and income tax payments.
While Do Kwon can be accused of mismanaging his project and reckless social behaviour, it’s highly unlikely that he would serve any jail time following the criminal complaints. Because it’s difficult to prove what he did was a fraud. It was market forces at play. At most, Do Kwon is likely to suffer a massive hit to his reputation unless evidence of any wrongdoing surfaces.