Black sheep

Faces of Crypto World- the villains, part two

By Sdom | Sdom84 | 23 Feb 2023

This is another part of "Faces of Crypto World "

As in any environment, especially when big money come into question, some very nasty guys could appear, I'd like to introduce some of them (though I belive many of them are preety well know by you).

Kwon Do-Hyung[2] (Korean: 권도형), 

also known as Do Kwon

Do Kwon

According to his tweet, Do Kwon was born in Seoul, South Korea, in 6th of September 1991. He attended high school at Daewon Foreign Language High School in South 

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

After coming back to South Korea to develop and found his startup, Anyfi…and this the beginning of his adventures with cryptocurrencies and CEFI/DEFI market, did it go well?

…there is a story:

Year 2018:

Do Kwon and Daniel Shin launch the Terra network (on January) and plans to develop Chai, an e-commerce payments application, also the are going to create a price-stable cryptocurrency against major fiat currencies to execute transactions. It is supported by the Terra Alliance, 15 large e-commerce companies in Asia.Terraform Labs, the firm that develops the Terra blockchain, is incorporated in Singapore (on April).

Year 2019:

The Terra Money white paper is published by Do Kwon and co-authors. According to the white paper, the founders’ goal was to fulfill what Bitcoin originally set out to be: a peer-to-peer electronic cash system, in order to achieve that, Terra implements a system of stablecoins – cryptocurrencies whose value is pegged to different assets like commodities or fiat currencies.

LUNA launch an initial coin offering to investors (January).

Year 2020:

Introduction of the Anchor protocol, a platform built on Terra that lets investors earn a high yield on their deposits and also borrow against their crypto holdings. (on July)

An UST, the Terra blockchain’s stablecoin, is publicly announced, with plans to launch on Ethereum and Solana. 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.

Terra launches synthetic stock protocol - Mirror (on December).

Year 2021:

LUNA’s price nearly doubles to record highs above $90, and is up 58% this month. This hype is taking place, in spite of previous SEC (The U.S. Securities and Exchange Commission) concerns that Mirror protocol may violate federal securities law. 

Year 2022 - seems to be very busy:

Luna Foundation Guard is announced by Do Kwong, an organization supposed to build reserves supporting the $UST peg amid volatile market conditions and also allocate resources supporting the growth and development of the Terra ecosystem (January).It raises $1 billion through the sale of LUNA tokens to buy bitcoin for UST’s reserve system, the main investors areJump Crypto and Three Arrows Capital. 

The investors behind LFG, proposes a mechanism for how to deploy the bitcoin (BTC) reserves to support UST’s price while in a crisis (23 of March) and purchases bitcoin worth $125 million (2,840 BTC at the time) for that reason. Over the past few days, the LFG’s bitcoin wallet address gets more than 27,000 BTC worth $1.3 billion. 

Terra’s LUNA tokens rise 10% and reaches new all-time highs of over $106. (29 of March)

on March 30: LFG purchases another 5,773 BTC, worth $272 million.

on April 5 LUNA token’s price reaches a next new all-time high of $119.2.

LFG continues purchases and boosts its stash to over $1.6 billion at the time. (in BTC, AVAX, LUNA).

The circulation of supply of LUNA hits an all-time low of 346 million tokens as LUNA tokens are burned to keep up with the rising demand for UST (27th of April).

UST gets a low of $0.985 after a series of large dumps of UST on Terra’s lending protocol Anchor and stablecoin exchange protocol Curve (7th of May).

LFG in order to defend the peg of UST commits to loaning $750 million of BTC to market makers and another $750 million of UST to be used to buy back BTC after volatility subsides(8th of May).

After UST is trying to get back to $1, deposits on the Anchor protocol plunge below $9 billion from $14 billion and the ANC protocol token fell 35% during the day. (9th of May) the same time UST loses its $1 peg for the second time and falls to as low as 35 cents. 

More than half, 58%, of traders place futures bets on higher LUNA prices despite Tuesday’s drop, leading to $63 million in liquidations are caused by 58% of traders place futures bets on higher LUNA prices despite previous drop (11th of May). LUNA reaches price levels previously seen in August 2021. Value locked on Anchor protocol drops $11 billion over two days. 

The LUNA price falls 96% in a day, reaching less than 10 cents. (12 of May)

At block height 7603700 – the Terra blockchain is officially ceased after LUNA falls sharply in price, threatening the network’s security. (12th of May), then the blockchain was commissioned again and halted for the second time at block 7607789 but it resumed activity after around nine hours. Trading on Terra tokens is ceased by Binance and OKx after UST loses its dollar peg and LUNA slumps by more than 99%. Binance later resumes trading in LUNA. 

 On 13th of May 13 Do Kwon proposes a “Revival Plan” that would see the network ownership distributed to UST and LUNA holders through 1 billion new tokens. 

Data analytics from Elliptic follows LFG’s $3.5 billion BTC reserve to major exchanges Gemini and Binance. 

LFG’s BTC reserves were reduced from around 80,000 bitcoins to 313 bitcoins during the attempt to save UST’s peg. (16th of May)

Do Kwon proposes to fork Terra without UST stablecoin, calling the current chain “Terra Classic.” 

A South Korean Terra-backer venture fund have lost over $3.5 billion on the Terra collapse. (19th of May)

Terra’s decentralized finance applications have lost $28 billion due to investors have abandoned the Terra ecosystem. (20th of May).

South Korean authorities are starting scrutinizing crypto exchanges more closely, due to fact that around 280,000 citizens are believed to fall victim of the abrupt plunge in UST and LUNA. 

Blockchain data analytics (Nansen) claims that the myth that a single attacker caused the depeg during UST's death spiral was false.

The launch of Terra 2.0 (with LUNA airdrop - 28th of May). Previous LUNA and UST holders will receive the new blochchain's native token, luna (LUNA), based on their holdings. The old Terra blockchain remains functional, and its token will be renamed to luna classic (LUNC).

Following the crash of Luna and TerraUSD, 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.

But what about the consequences? Will the men responsible for all the frauds and losses be prosecuted?

… well the investigation carries on…

As I found on (...)


“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.


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.”


A South Korean court issued an arrest warrant for Kwon and five others on allegations of violations of Korean capital markets law.The prosecutor's office said all six individuals were located in Singapore. The Seoul Southern District Prosecutors' Office said they had begun the procedure to place Kwon on the Interpol red notice list and revoke his passport (September 2022).


It seems to be that we wiil have to wait long time, untill we hear the end of this story.

What is quite suprising, quite a lot well oriented in cypto specialists were 

predicting a Terraform Labs fate like that, for example: 

Cyrus Younessi, head of risk at MakerDAO and a former research analyst at Scaler, tells Scaler why he believes Terra/LUNA would not work, describing a scenario that later unfolded in mid-2022, also crypto trader Algod, who compared UST/LUNA to a Ponzi scheme, bets $1 million against Do Kwon that the price of LUNA will be below $88 by March of 2023. Another crypto trader, GiganticRebirth, bets $10 million against Kwon that LUNA will be below $88 on 2023.


Well what can I say …In my own opinion, frauds like that will happen many times more, and its not a matter of cyptos, its a matter of human greedy nature.

The crypto market as its a preety young, needs to be cleared from „bad blood”, but it will take a long time, I suppose.


I hope, you enjoyed the article, see you next time!



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