Current updates on the activities of Terraform Labs and Do Kwon.

The cryptocurrency world was thrown into chaos when the Terraform Labs and UST crisis hit, resulting in a market crash that cost investors billions. Now, almost two years later, let’s take a look at the current state of this cryptocurrency turmoil.

Do Kwon, the controversial and enigmatic founder of Terraform Labs and the creator of TerraUSD (UST) and Luna tokens, continues to be a prominent figure in the cryptocurrency industry. In March 2022, the value of UST and Luna plummeted, erasing approximately $60 billion from investors’ holdings.

Since then, there have been significant developments. Kwon is currently awaiting extradition, and efforts are underway to revive the once successful project. The situation surrounding Terraform Labs and Do Kwon is still evolving.

So, how did the Terra ecosystem collapse? In May 2022, as news of the investigation broke, the price of UST dropped to $0.98, breaking its peg to the dollar. Kwon assured investors that the situation was under control, but the following day saw a further decline, with the token’s value plummeting to $0.35.

In a desperate attempt to sustain the dollar peg, Kwon took to Twitter, urging his followers to invest more. However, this strategy proved unsuccessful. Investors began selling off their UST and Luna holdings, causing Luna’s value to crash to $0.10, a staggering 96% decline. Social media users started to believe that the Terra ecosystem was nothing more than a pyramid scheme designed to swindle investors.

However, there was a glimmer of hope for Terraform Labs. In mid-May 2022, Kwon broke his silence and unveiled plans for a new Terra blockchain that would exclude UST. This proposal received support from 65% of investors.

Terra 2.0 was launched on May 28, 2022, but its value quickly plummeted. Luna lost 77% of its value, followed by an additional 20% drop on June 8. In light of these developments, Kwon restricted access to his Twitter account, limiting it to select followers.

The United States Securities and Exchange Commission (SEC) initiated an investigation into Terraform Labs and its algorithmic stablecoin in June 2022. The SEC focused on whether the marketing of UST violated federal investor protection laws before the stablecoin crash. They specifically scrutinized Terraform Labs’ activities for potential violations of securities and investment product laws.

By February 2023, the SEC charged Terraform Labs and co-founder Do Kwon with conducting a “multi-billion-dollar securities fraud.” In December 2023, a court ruled in favor of the regulator, stating that UST, LUNA, wLUNA, and MIR assets constituted investment contracts.

Meanwhile, South Korea also launched an investigation into Terra in May 2022. They were looking into potential intentional price manipulations or other illegal actions that may have caused the project’s collapse. Former employees of Terraform Labs involved in the early development of the Terra ecosystem in 2019 were summoned for questioning.

In September 2022, a South Korean court issued an arrest warrant for Do Kwon and five others on charges of violating the country’s capital markets laws. At the time, all of them were reportedly in Singapore. Terraform Labs representatives argued that the Korean prosecutor’s office had exceeded its authority in pursuing Do Kwon.

It was reported last June that Kwon could face legal consequences in multiple jurisdictions, starting with South Korea. The lead investigator in Kwon’s case anticipated a significant sentence, potentially over 40 years, for the financial fraud charges. Prosecutors had already seized 246.8 billion won (approximately $190 million) related to Kwon’s case, with plans to freeze an additional 31.6 billion won (about $24.25 million).

On January 21, Terraform Labs filed for bankruptcy. According to court documents, the company’s assets and liabilities were estimated to be between $100 million and $500 million, with a varying number of creditors.

Do Kwon had been living in Singapore until mid-September 2022 when South Korea issued an arrest warrant for him. Interpol also released a red notice, leading Kwon to flee. He allegedly hid in Serbia for several months, but his exact whereabouts were unknown. In March 2023, authorities in Montenegro arrested him for attempting to travel to Dubai with a fake passport, resulting in a four-month prison sentence.

For nearly a year after his arrest, there was a debate about whether to extradite Kwon to the United States or South Korea. Eventually, Montenegro’s Supreme Court ruled in favor of extraditing him to South Korea, allowing for a streamlined process to transfer him to South Korean officials for further legal action.

In summary, it has been almost two years since the collapse of the Terra cryptocurrency project, and the story is far from over. The bankruptcy of Terraform Labs and the extradition of its founder, Do Kwon, mark the beginning of a new phase in one of the largest cryptocurrency collapses in history. The fate of the investors who lost billions in the project remains uncertain, as does the severity of the penalties that Kwon may face. After two years of investigation, South Korean authorities are expected to take a strong stance against Kwon for his alleged deceit, evasion, and lack of cooperation.