Crypto Fugitive Do Kwon Is Set to Lose His South Korean Passport

South Korea is set to strip Terraform Labs Pte founder Do Kwon of his passport, intensifying pressure on the fallen entrepreneur to return to the nation and face charges over a $60 billion crypto crash.

The 31-year-old must hand the document back or else it will be revoked in about 14 days, according to a government notice posted on Wednesday. Kwon’s location is unclear and he is the subject of an Interpol red notice.

Kwon was behind the TerraUSD stablecoin, which was meant to have a constant $1 value in a complex arrangement with sister token Luna. The edifice fell apart in May, worsening a $2 trillion crypto rout, pushing a range of digital-asset firms toward insolvency and causing consternation at regulators globally.

He and five others have been accused of breaching South Korea’s capital-markets law. Terraform Labs has rejected the charges and said the case has become “highly politicized.”

The Chosun Ilbo newspaper reported that prosecutors in Seoul have frozen an additional 56.2 billion won ($40 million) of assets they claim are Kwon’s, bringing the total to about 95 billion won.

Kwon on Twitter said “I don’t know whose funds they’ve frozen, but good for them, hope they use it for good.” He didn’t immediately reply to an email seeking comment.

Prosecutors on Thursday confirmed a local report that one of the people accused, surnamed Yu, had been arrested on charges including violations of the capital-markets law, fraud and breach of duty related to market manipulation.

https://www.bloomberg.com/news/articles/2022-10-06/crypto-fugitive-do-kwon-is-set-to-lose-his-south-korean-passport

SPF Confirms That Terra Luna Founder is No Longer in S’pore

Seems like Terra Luna’s founder Do Kwon’s attempts to renew his employment pass in Singapore didn’t work, since the SPF had confirmed that he is no longer in Singapore.

This comes after South Korea has been trying to force him to leave Singapore while investigating him for crimes in the Korean capital market.

Wait, Who?

For the “cryptocurrency bros” among us, you’ve probably heard of Terra Luna, a cryptocurrency company that was founded by Mr Kwon, a South Korean.

The 31-year-old, who is known as Do Kwon, founded Terraform Labs in 2018 with a partner after failing at his first attempt to invent a stablecoin project.

And for those who have absolutely no idea who I’m talking about, here’s all you need to know about him:

After his cryptocurrency company crashed, he’s been trying to apply to renew his employment pass in Singapore. But it seems like that has crashed and burned too.

SPF Confirms He Left Singapore

A spokesperson for the Singapore Police Force confirmed that Do Kwon is no longer in Singapore.

The SPF will be working together with the Korean National Police Agency (KNPA) in investigations against him. This comes after Seoul issued arrest warrants for Do Kwon and five others based in Singapore for violating South Korea’s capital market regulations on 14 September.

As for how Kwon’s actions came to light, the Financial Times previously reported that the relevant authorities in South Korea apparently started looking into issues related to Kwon and Terraform Labs due to two complaints being filed against the company.

The complaints, which represented a whopping 81 investors, accused Kwon and Terraform Labs of “deceiving investors”.

“Not On The Run”

After news broke out that he isn’t in Singapore anymore, Do Kwon tweeted that he is “not on the run”.

“For any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,” tweeted Do Kwon on 18 September.

“We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months. Cheers.”

Despite this, he hasn’t revealed his location since leaving Singapore. Saying that he isn’t on the run sounds exactly like something one would say… if they’re running away or hiding.

His latest tweet at point of writing is a joke about how he hasn’t gone running in a while, referencing his claim that he isn’t on the run.

https://goodyfeed.com/spf-confirm-dokwon-left-sg/

Do Kwon pushed into corner amid escalating skepticism over Terra 2.0

Do Kwon, co-founder of Terraform Labs, is being pushed into a corner amid growing skepticism over its much-hyped Terra Luna 2.0 ecosystem.

Binance CEO Changpeng Zhao was the latest crypto mogul to have stepped up criticism of the Korean developer. He has ordered his exchange team to look into any allegations that Kwon and Terraform Labs face over the recent Luna fiasco.

The decision reflected the escalating controversies surrounding the sustainability of the revived Terra ecosystem after the value of its predecessor suddenly dropped to near zero last month.

Kwon then launched the new ecosystem, as part of a desperate bid to compensate for investor loss by issuing new tokens.

However, with Luna 2.0 showing drastic price fluctuations after its launch last week, crypto tycoons and industry officials have issued a series of warning messages against the cryptocurrency, urging investors to pay special attention before buying the new Luna token.

The world's largest crypto exchange operator also reiterated its strong willingness to team up with global investigative authorities to get the facts straight regarding the rumors and allegations that Kwon and his company face.

Daegun, a Seoul-based law firm representing a group of 12 victims from the Luna fiasco sued Kwon and Shin Hyun-sung, another co-founder of the company, at the Seoul Southern District Court, Thursday.

Kwon is known to be staying in Singapore, though his whereabouts have not been confirmed presently. He is still actively promoting the rebranded Terra on his social networking accounts.

The Korean entrepreneur came under heavy criticism across the globe particularly due to his absence from public appearances even weeks after the big scandal erupted. While prices for the Terra stablecoin and its sister token Luna massively dropped each day in mid-May, he did not take any immediate actions, nor did he engage in any real-time communication with investors.

"Terra itself, their project team, was quiet for way too long and not frequent enough in their communications with users," the Binance leader told Fortune in a recent interview. "So, I think all of those things went wrong."

Despite the unceasing lawsuits against the Terraform Labs founder here and abroad, Kwon did not make any hints of him making a public appearance to apologize to investors over the two collapsed cryptocurrencies.

Korean authorities have also launched an investigation into Terraform Labs and its founders. The prosecution has recently summoned a former developer of the company for questioning. But it remains unclear whether the prosecution will be able to summon Kwon for the time being.

http://www.koreatimes.co.kr/www/biz/2022/06/126_330374.html

Taiwanese man commits suicide after losing nearly NT$60 million from Luna crypto crash

Man in Taichung depressed after losing 99% of investment in Luna when TerraUSD collapsed

TAIPEI (Taiwan News) — A man in Taichung City was found dead on Tuesday (May 24) after falling from his apartment in an apparent suicide after losing a large sum of money from the collapse of the crypto token Luna.

At 2 a.m. on Tuesday in Taichung's 7th Redevelopment Zone, a resident reportedly fell from his high-rise, luxury apartment tower, reported NOWnews. A security guard working on the night shift heard a loud noise, rushed out to investigate, and found a severely injured man lying on the ground.

When police arrived at the scene, it was immediately clear the man had died. A floor-by-floor inspection of the apartment building revealed the deceased was a 29-year-old tenant surnamed Wu (吳), who resided on the 13th floor.

Wu left no apparent suicide note and there was no sign of an intrusion or struggle. Officers also ruled out death from COVID as he tested negative for the virus.

After inspecting his phone, prosecutors found that Wu had recently complained to his relatives and friends that the value of the Luna tokens he had amassed had collapsed by 99% within just two days.

He wrote that this cost him a great deal of money and depressed him. According to one text message exchange, he invested US$2 million (NT$58.63 million) in Luna tokens, but after their value crashed he was left with only US$1,000.

However, police added that Wu's financial dealings and the cause of his fatal fall are still under investigation.

The blockchain handling TerraUSD stablecoin and its sister token Luna stopped handling new transactions on May 13 after the two collapsed. That month, TerraUSD, which was pegged to the U.S. dollar through a complex algorithmic relationship with Luna, plummeted to 10 cents, causing Luna to crash from an all-time high of US$119.51 to "virtually zero," reported Bloomberg.

Those considering suicide should immediately call the Taiwan Suicide Prevention Center at 1925 or Taiwan Lifeline International at 1995. Foreign residents can call the Community Services Center's emergency hotline at 0932-594-578, 24 hours a day.

https://www.taiwannews.com.tw/en/news/4551502

Explainer: Crypto crash — why it's difficult for burned Luna, TerraUSD investors to seek financial recourse

SINGAPORE — Many young investors here lost significant chunks of their life savings in a span of days when a popular cryptocurrency went into meltdown. They were left wondering if they could recover the money, or if the authorities could help.

Some were left puzzled at the description of TerraUSD, better known as UST and its affiliated cryptocurrency Luna, as a "stablecoin", which gave them the impression it was perhaps safer than other cryptocurrencies.

One person filed a police report, though TODAY understands that the police are not investigating the matter.

The “concerned citizen”, who wrote on Twitter that the police report was filed, also called the coin a "Ponzi scam" that "became worthless overnight".

This all happened after TerraUSD broke its 1:1 peg to the United States dollar and crashed in value. While "stablecoins" have no real legal status, they are linked to the value of assets such as the US dollar.

Luna, once ranked among the top 10 most valuable cryptocurrencies, has since plunged to virtually zero from an all-time high of US$119.18 set on April 5 this year.

Luna and TerraUSD (UST) are tokens that run on the Terra network, a blockchain-based project developed by start-up Terraform Labs, which is registered in Singapore.

In response to queries on possible recourse for investors, a Monetary Authority Singapore (MAS) spokesperson reiterated its stance on cryptocurrencies — that they are "highly volatile and often not anchored on economic fundamentals", which means that they are "highly risky and not suitable for retail investors".

"Certain cryptocurrencies are promoted as having a stable value, commonly known as 'stablecoins'. However, even such stablecoins have experienced fluctuations in market price.

"MAS has consistently warned the public on the risk of trading in cryptocurrencies," the spokesperson said.

So, do investors have no means of recourse?

TODAY spoke to lawyers to find out if there is anything that can be done, what distinguishes promotions and marketing tactics from scams and whether the authorities can do anything to help investors who have lost money.

WHAT RECOURSE IS THERE FOR INVESTORS?

Although some lawyers said that there is typically little recourse for investors in these kinds of products, some believe that it depends on whether there has been wrongdoing by stakeholders or a counter-party. This could involve, for example, any misrepresentation of what a "stablecoin" is.

Mr Shaun Leong, partner in the international arbitration and litigation team at law firm Withers KhattarWong, said that investors may consider a class action proceeding through either arbitration, mediation or court.

"But, it really depends on what their contractual rights are. It really depends on what was represented in the White Paper, whether there are any expressly selected choice of dispute resolution options there."

A White Paper refers to a document that explains the technology and purpose of the project, aimed at informing prospective investors how the cryptocurrency was conceived and its purpose.

Mr David Chan, a partner at law firm Shooklin and Bok, told TODAY in an email interview on Thursday that it may be too early to tell if there is any possible wrongdoing by stakeholders such as TerraForm Labs or its co-founder and chief executive officer Do Kwon at this point.

"There is currently fact-finding going on by interested stakeholders as to whether Luna Foundation Guard properly deployed its bitcoin reserves to defend UST’s peg.

"If evidence of wrongdoing emerges, there may be civil causes of action available to certain investors given that TerraForm Labs is incorporated in Singapore," Mr Chan said.

Mr Koh Chia Ling, managing director of law practice Osborne Clarke, said though, that there may be little recourse for these investors since the terms and conditions for the sale of a coin have been set out to protect the creators and founders.

He added: "A possibility is misrepresentation, fraud or deceit, but all that will depend on what creators and founders say or do to induce investments."

BUT WAIT, WHAT IS A STABLECOIN?

Stablecoins are digital tokens pegged to the value of traditional assets such as the US dollar. Often promoted as a stable means of exchange, these coins are often used by traders to move funds around when speculating on other cryptocurrencies.

However, "stablecoin" is not a legal term under Singapore law.

Mr Adrian Ang, partner and co-head of fintech practice at Allen & Glenhill LLP, said: "In common parlance, the term is often used to refer to a digital token that does not fluctuate in value (as compared to cryptocurrencies such as bitcoin) and has a somewhat fixed value referenced via a fiat currency (any sovereign currency such as the US dollar or Japanese yen)."

Methods that issuers use to create stability include collecting fiat currency as collateral for each stablecoin issued, or taking cryptocurrencies as collateral instead, he explained.

However, in general, these stablecoins "are not subject to any statutory protection for their trading of stablecoins (that are digital payment tokens)," Mr Ang added.

"Should a stablecoin experience a dramatic fall in value (from the fiat currency that it is meant to be pegged to), any recourse available to the investors will likely revolve around the circumstances surrounding the terms under which the investor purchased the stablecoin and any potential promises provided by the issuer of the stablecoin to the investor."

Other lawyers said that the crash has called into question the "classical notion of a stablecoin".

Mr Leong from Withers KhattarWong said: "Because, for example, if you use the word 'cryptocurrency', people confuse it with a real currency. That is questionable.

"When you use the language 'stablecoin', people confuse it and think that it is the most stable out of the cryptocurrencies... but this is not necessarily true."

A lot more at https://www.todayonline.com/singapore/explainer-crypto-crash-why-its-difficult-burned-luna-terrausd-investors-seek-financial-recourse-1901171

Police report made against Terraform Labs in Singapore; police not investigating

SINGAPORE - A police report was lodged by a "concerned citizen" against Singapore-registered firm Terraform Labs and its South Korean co-founder Kwon Do Hyeong last week.

The complainant claimed to know of more than 1,000 Singaporeans who have invested in UST and Luna, and that the police report was to "seek justice for all those who have lost money".

The report, which has been circulating online, also contained the address of Terraform Labs.

Police confirmed the report had been made, but did not confirm that they are investigating the company.

The Straits Times understands that the police are not investigating.

Last week, the price of both TerraUSD - better known as UST - and its affiliated cryptocurrency Luna collapsed, following a wave of selling pressure.

UST is a stablecoin that was pegged to the United States dollar using an algorithm.

The Terra blockchain was halted and restored twice, which saw both Luna and UST being delisted from exchanges, including Binance.

Terraform Labs was co-founded in 2018 by Mr Kwon, better known as Do Kwon, and American citizen Daniel Hyunsung Shin, who is the driving force behind the Terra blockchain.

An Accounting and Corporate Regulatory Authority record showed the firm had a paid-up capital of $12.

More at https://www.straitstimes.com/business/companies-markets/police-report-made-against-terraform-labs-in-singapore-police-not-investigating

This video certainly didn't age well, looks like Mr Marco Wang will have to come out of his early "retirement" to rejoin the workforce soon. ;)

Humblebragger spotted, in the end he'll probably still live way better than most of us peasants despite his misfortune.

An important message if you just got rekt by the financial markets

https://thewokesalaryman.com/2022/05/12/an-important-message-if-you-just-got-rekt-by-the-financial-markets/

Put it bluntly, this is a greedy couple who fervently believed in 不劳而获.

Stellar returns from investment built on a Ponzi scheme will never, ever last. Crypto is just another tulip mania.

Perhaps the sole consolation for them would be that they briefly enjoyed being very rich a month ago.

Do Kwon proposes creating another blockchain from Terra's ashes

TERRAFORM Labs co-founder Do Kwon offered another proposal to revive its troubled Terra blockchain by getting rid of the failed TerraUSD stablecoin and revamping the project into a new network.

Kwon wants to copy the blockchain's code to create a new network, called Terra, and to distribute new tokens to former Terra supporters like key app developers, those whose computers order transactions on the network, and those who still hold TerraUSD, Kwon wrote in a post on a research forum.

This is Kwon's second proposal to revive the network. Many stakeholders who lost money when TerraUSD collapsed are hoping for a way out of the crisis. But many long-time crypto experts aren't hopeful. Zhao Changpeng, chief executive officer of the world's biggest crypto exchange and an early Terra investor, Binance, said in a tweet that forks - the copying of the blockchain that Kwon is proposing - "don't create value".

The Luna Foundation Guard (LFG), the entity set up by Terraform Labs to maintain TerraUSD's peg to the dollar, used up roughly US$2.9 billion in crypto reserves since May 7 trying to stabilize the token, data compiled by Bloomberg based on figures released Monday on LFG's unverified Twitter account show. The reserves stood at almost US$3.2 billion before, according to the data.

"The Terra ecosystem was great in terms of transactional execution, maintaining low costs per transaction and teams building upon it," said Min Park, general partner at Lunatic Capital, which invests in projects built on Terra. "This [proposal] ensures the continuation of works and progress for the time being of projects present and future. However, we would recommend to our teams that not being reliant on one ecosystem would be a great way to reduce concentration risk."

Unlike collateralized stablecoins such as Tether, UST primarily used algorithms and trader incentives involving its sister coin Luna to maintain a 1-to-1 peg with the dollar. As the token grew in prominence, its backers started to build a massive war chest of Bitcoin and other cryptocurrencies as an additional backstop to UST. BLOOMBERG

Luna Crypto Crash: How UST Broke, Why It Matters and What's Next

The cryptocurrency market isn't pretty right now. Red is everywhere: Bitcoin and ether are at their lowest points since 2020, and altcoins like dogecoin and cardano are faring even worse.

While it's painful for crypto investors, this dip is far from unprecedented. Cryptocurrencies are infamous for their volatility, and tempestuous economic conditions are bringing down not just crypto, but the stock market too.

What is unprecedented, however, is the collapse of the luna cryptocurrency and its associated terraUSD stablecoin, aka UST. You may not have heard of UST before, or know what a stablecoin is, but it's a big deal. Billions of dollars in crypto wealth have been vaporized, sending shockwaves throughout the whole market.

There are two intertwined stories here: That of the UST stablecoin and that of luna, both of which are part of the terra blockchain. The UST coin is designed to retain a value of $1 at all times, but it was depegged last Monday, on May 9, and has since fallen to just 17 cents. Then there's luna, the centerpiece of terra's ecosystem. Its value has collapsed in one of the most stunning crypto crashes ever recorded.

The coin's price fell from $116 in April to just a penny on Thursday. It's fallen further, trading over the weekend for a fraction of a cent. At the time of writing, luna is down to an eighth of a penny.

Such an implosion has been seen for small-cap memecoins in the past, but never for something the size of luna, which had a market cap of over $40 billion just last month.

"This is historic for the crypto markets," said Mike Boroughs, co-founder of crypto investments firm Fortis Digital. "This is a defining moment for the space due to its size and impact in terms of the amount of people that lost substantial value."

Here's what you need to know.

What's a stablecoin?

To understand the crypto catastrophe, you first need to know what a stablecoin is. In essence, it's a cryptocurrency that's pegged to a more stable currency. The biggest such coins are tether and USDC, which like most stablecoins are both tied to the US dollar. So if you have 1,000 USDC tokens, for instance, they can at any time be exchanged for $1,000.

Stablecoins are integral parts of "DeFi," or decentralized finance, designed to be ways for investors to hedge against the volatility of the cryptocurrency market. Say ether's price is $2,000 -- a trader could exchange one ether for 2,000 USDC tokens. If tomorrow ether drops 50% to $1,000, those 2,000 USDC tokens would still be worth $2,000 and could be traded for two ether tokens. When investors smell a downswing coming, they put their money on stablecoins like tether, USDC and, until this week, UST.

Stablecoins also provide the means for cryptocurrency loaning and borrowing, making them a foundational technology of DeFi.

The terra/UST coin is different from tether and USDC in a key way -- it's not backed by actual US dollars, but rather is what's known as an algorithmic or decentralized stablecoin. The idea is that, through a few clever mechanisms, plus billions in bitcoin reserves, the UST's dollar peg can be maintained without it having to be backed by the dollar.

"A decentralized stablecoin is the Holy Grail of DeFi," said Cyrus Younessi, former head of risk management at MakerDAO, the group behind DAI stablecoin. The selling point of bitcoin and ether is that they're difficult for bureaucrats, politicians and central bankers to control, but their downside is price volatility. "If you could take those assets, extract stability out of them and productize it, then that's huge," Younessi said.

"But it's not very viable."

Terra, luna and UST: What are they?

Terra is a blockchain, just like ethereum and bitcoin. While ethereum's blockchain natively produces ether tokens, terra natively produces luna. Before the depeg, luna was trading at $85.

To create UST, you need to burn luna. So for instance, last week you could trade one luna token for 85 UST (since luna was worth $85), but the luna would be destroyed ("burned") in the process. This deflationary protocol was meant to ensure luna's long-term growth. As more people buy into UST, more luna would be burned, making the remaining luna supply more valuable.

To entice traders to burn luna to create UST, creators offered an insane 19.5% yield on staking -- which is essentially crypto terminology for earning 19.5% interest on a loan -- through what they called the Anchor Protocol. Instead of parking your savings at a bank for a 0.06% interest rate, the pitch is to turn put your money into UST, where it can earn nearly 20% in interest. Before the depegging, over 70% of UST's circulating supply, around $14 billion, was deposited in this scheme.

Here's the key to UST retaining its peg: 1 UST can always be exchanged for $1 worth of luna. So if UST slips to 99 cents, traders could profit by buying a huge amount of UST and exchanging it for luna, profiting 1 cent per token. The effect works in two ways: People buying UST drives the price up, and UST being burned during its exchange to luna deflates the supply.

Then there's the reserves. Terra founder Do Kwon created the Luna Foundation Guard, a consortium whose job it is to protect the peg. The LFG had about $2.3 billion in bitcoin reserves, with plans to expand that to $10 billion worth of bitcoin and other crypto assets. If UST dipped below $1, bitcoin reserves would be sold and UST bought with the proceeds. If UST goes above $1, creators would sell UST until it goes back to $1, with the profit being used to buy more bitcoin to pad out the reserves.

It all makes sense. But UST, at the time of writing, is worth 17 cents.

What went wrong?

It all started on Saturday, May 7. Over $2 billion worth of UST was unstaked (taken out of the Anchor Protocol), and hundreds of millions of that was immediately sold. Whether this was a reaction to a particularly volatile period -- the rise in interest rates has particularly affected cryptocurrency prices -- or a more malicious attack on Terra's system is a topic of debate.

Such huge sells pushed the price down to 91 cents. Traders tried to take advantage of arbitrage, exchanging 90 cents worth of UST for $1 worth of luna, but then a speed bump appeared. Only $100 million worth of UST can be burned for luna per day.

Investors, already flighty in the current gloomy market, flocked to sell their UST once the stablecoin couldn't retain its peg. It bounced between 30 cents and 50 cents in the week following the initial depeg, but has now fallen to a steady low of under 20 cents. Its market cap, which was around $18 billion in early May, now stands at $2 billion.

It's worse for luna holders. The value of luna tokens has almost completely disappeared: After reaching a high of just under $120 in April, luna's current price is a fraction of a penny.

On the possibility of this being a malicious attack. Some have speculated that an attacker attempted to break UST in order to profit from shorting bitcoin -- that is, betting on its price going down. If would-be attackers created a large position in UST and then unstaked $2 billion at once, it could depeg UST, which would mean terra's team would have to sell portions of its bitcoin reserve to repeg the stablecoin. Once investors saw that UST lost its peg, they would then rush to unstake and sell their UST, which would require more bitcoin reserves to be sold, adding further sell pressure.

Again, this is still speculation. Younessi is unsure whether the depeg was caused by a coordinated attack or not, but said that the responsibility is on crypto developers to create more secure systems.

"Our job as DeFi builders is to build systems that are resistant [to exploits]," he said. "That's literally in the original threat model that anyone in crypto builds: How would this hold up if a guy with $100 billion came in and tried to take this down?"

Four years ago, while working as a DeFi analyst at Scalar Capital, Younessi called Terra's model "broken".

"Terra could have grown to be 10 times as large" before such a crash, he said to CNET. "Better that we prick that bubble of unsustainable protocols sooner than later."

A lot more at https://www.cnet.com/personal-finance/crypto/luna-crypto-crash-how-ust-broke-why-it-matters-and-whats-next/

Aiyah this is merely paper gain and paper loss nia, it's not as if he actually pumped millions of dollars of cold hard cash into his investment.......

The wife could always embark on a whoring career to recoup their losses in double quick time.

That's what you get for being overly greedy. :P