Kwon Do-hyung (; born 6 September 1991), 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 In legal terminology, a complaint is any formal legal document that sets out the facts and legal reasons (see: cause of action) that the filing party or parties (the plaintiff(s)) believes are sufficient to support a claim against the part ...

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 Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information.commodities fraud,

wire fraud Mail fraud and wire fraud are terms used in the United States to describe the use of a physical (e.g., the U.S. Postal Service) or electronic (e.g., a phone, a telegram, a fax, or the Internet) mail system to defraud another, and are U.S. fede ...

and conspiracy. In December 2024, after multiple court cases, Do Kwon was ordered to be extradited to the United States.

Early life and education

Do Kwon was born in

Seoul Seoul, officially Seoul Special Metropolitan City, is the capital city, capital and largest city of South Korea. The broader Seoul Metropolitan Area, encompassing Seoul, Gyeonggi Province and Incheon, emerged as the world's List of cities b ...

, South Korea, on 6 September 1991. He attended Daewon Foreign Language High School in Seoul and received

Bachelor of Computer Science The Bachelor of Computer Science (abbreviated BCompSc or BCS) is a bachelor's degree for completion of an undergraduate program in computer science. In general, computer science degree programs emphasize the mathematical and theoretical foundatio ...

from

Stanford University Leland Stanford Junior University, commonly referred to as Stanford University, is a Private university, private research university in Stanford, California, United States. It was founded in 1885 by railroad magnate Leland Stanford (the eighth ...

in 2015.

Career

After graduating in 2015, he worked briefly as a software engineer for both

Microsoft Microsoft Corporation is an American multinational corporation and technology company, technology conglomerate headquartered in Redmond, Washington. Founded in 1975, the company became influential in the History of personal computers#The ear ...

and

Apple An apple is a round, edible fruit produced by an apple tree (''Malus'' spp.). Fruit trees of the orchard or domestic apple (''Malus domestica''), the most widely grown in the genus, are agriculture, cultivated worldwide. The tree originated ...

. 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.

Terraform Labs

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.

Legal issues and arrest

Regulatory issues

The

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

(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

issued a

subpoena A subpoena (; also subpœna, supenna or subpena) or witness summons is a writ issued by a government agency, most often a court, to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of ...

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.

Collapse of Terra blockchain

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. The Terra blockchain began to collapse on 7 May 2022, when several prominent investors reportedly sold over $285 million worth of UST on Binance. On 8 May 2022, the value of UST hit a low of $0.985. In response, the Luna Foundation Guard (LFG), which was established to serve as a reserve for Luna, loaned a total of $1.5 billion in an effort to defend the peg and mitigate the volatility of UST.

Class Actions and Forced Arbitration

With approximately 200,000 South Korean Luna investors harmed by the crash, groups of Korean investors announced that they would be filing a

class-action A class action A class action is a form of lawsuit. Class Action may also refer to: * ''Class Action'' (film), 1991, starring Gene Hackman and Mary Elizabeth Mastrantonio * Class Action (band), a garage house band * "Class Action" (''Teenage R ...

lawsuit against Terraform Labs. The South Korean government also announced that it would pursue Kwon on criminal charges. As of 17 May, more than 1,600 investors have signed up for the lawsuit with domestic law firms LKB & Partners LLC and Kisung LLC. In the United States, a class action, Patterson v. TerraForm Labs Pte Ltd. et al., was filed against Kwon and others in the

United States District Court for the Northern District of California The United States District Court for the Northern District of California (in case citations, N.D. Cal.) is the federal United States district court whose jurisdiction comprises the following counties of California: Alameda, Contra Costa, De ...

on 17 June 2022. Briefs are being presented to the

under the counsel of Scott + Scott Attorneys at Law LLP, The Rosen Law Firm PA, Kahn Swick Foti LLP, and Bragar Eagel & Squire P.C., accusing Do Kwon and Terraform Labs of soliciting unregistered securities while misleading investors about their viability. In September 2022, a 56.9 million class action was filed at the

High Court of Singapore The High Court of Singapore is the lower division of the Supreme Court of Singapore, the upper division being the Court of Appeal of Singapore, Court of Appeal. The High Court consists of the Chief Justice of Singapore, chief justice and the ju ...

against Kwon, Terraform Labs, Nikolaos Alexandros Platias and the Luna Foundation Guard. In February 2023, US financial regulators charged Do Kwon and TerraForm Labs with "orchestrating a multi-billion dollar crypto asset securities fraud". On 5 April 2024, a jury in the United States District Court for the Southern District of New York found Do Kwon and Terraform Labs PTE Ltd. liable for defrauding investors in crypto asset securities. The SEC had argued that Kwon secretly sought third-party financing after TerraUSD slipped from its stablecoin peg and then falsely stated in May 2021 that the recovery was because of algorithmic stability. The SEC also said that Kwon and Terraform had falsely claimed that its blockchain was used for business transactions on South Korea's Chai app.

Arrest

On 21 June 2022, YTN reported that prosecutors were looking to invalidate Kwon's South Korean passport. On 14 September 2022, 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 Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...

. On 19 September 2022, 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. In December 2022, South Korean authorities shared their belief that Kwon was hiding in

Serbia , image_flag = Flag of Serbia.svg , national_motto = , image_coat = Coat of arms of Serbia.svg , national_anthem = () , image_map = , map_caption = Location of Serbia (gree ...

, which did not have an extradition treaty with South Korea. On 23 March 2023, Kwon was arrested at Podgorica Airport in

Montenegro , image_flag = Flag of Montenegro.svg , image_coat = Coat of arms of Montenegro.svg , coa_size = 80 , national_motto = , national_anthem = () , image_map = Europe-Mont ...

, which also did not have an extradition treaty with either South Korea or the United States, while attempting to travel to

Dubai Dubai (Help:IPA/English, /duːˈbaɪ/ Help:Pronunciation respelling key, ''doo-BYE''; Modern Standard Arabic, Modern Standard Arabic: ; Emirati Arabic, Emirati Arabic: , Romanization of Arabic, romanized: Help:IPA/English, /diˈbej/) is the Lis ...

using falsified

Costa Rica Costa Rica, officially the Republic of Costa Rica, is a country in Central America. It borders Nicaragua to the north, the Caribbean Sea to the northeast, Panama to the southeast, and the Pacific Ocean to the southwest, as well as Maritime bo ...

n documents. He was also found to be carrying falsified Belgian travel documents. Following his arrest, he was charged by a federal grand jury in

Manhattan Manhattan ( ) is the most densely populated and geographically smallest of the Boroughs of New York City, five boroughs of New York City. Coextensive with New York County, Manhattan is the County statistics of the United States#Smallest, larg ...

of eight counts, including

and conspiracy. One month later, KBS News reported that Kwon had sent 9 billion '' won'', equaling USD $7 million, to law firm Kim & Chang prior to the collapse of TerraUSD. On 11 May 2023, Kwon pled not guilty to a charge of using a forged Costa Rican passport to travel through the Montenegro airport where he was arrested. On 19 June 2023, Kwon and Terraform Labs' former finance officer Han Chang-joon were sentenced to four months' imprisonment by a Montenegrin court for using forged passports. Kwon appealed the court ruling, but lost the appeal in Montenegro's highest court. In November 2023, the Montenegro High Court approved Do Kwon's extradition to South Korea or the United States. The final decision to extradite him to South Korea was made by the Minister of Justice of Montenegro. On 11 January 2024, Do Kwon's lawyers asked to delay the trial in '' SEC v. Terraform Labs'' to mid-March 2024 so that Do Kwon could be extradited to the US and attend. On 21 January, Terraform Labs declared

Chapter 11 bankruptcy Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, w ...

in the United States, listing assets and liabilities in the range of $100–500 million. In February 2024, his former finance officer was ordered extradited from Montenegro to South Korea. On 5 March 2024, the Court of Appeals of Montenegro overturned the earlier court decision to extradite Kwon to the United States, and ordered it to repeat the process and determine if Kwon should be extradited to the United States or to South Korea. On 12 August 2024, the Supreme Court of Montenegro postponed the extradition of Do Kwon to South Korea. This decision followed a request from the Supreme State Prosecutor's Office and delays earlier rulings by the High Court in Podgorica and the Court of Appeal. The postponement will remain in effect until the Supreme Court reviews the legality of these decisions. Do Kwon remains in Montenegro as legal proceedings continue. On 18 October 2024, The Constitutional Court of Montenegro temporarily suspended the extradition of Kwon pending its review of his appeal. This pause overrides the Supreme Court's earlier decision authorizing the Justice Minister to proceed with Kwon's extradition. In December 2024, after another Supreme Court ruling decided that the

Minister of Justice A justice ministry, ministry of justice, or department of justice, is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...

had the final say and Kwon consented to extradition to either the United States or South Korea, Minister Bojan Bozovic, ordered his deportation to the former based on the preponderance of the legal criteria for extradition.

Other allegations

According to the South Korean special prosecution office, Kwon was found to have withdrawn approximately $35 million worth of cash even after having been arrested in Montenegro. In June 2023, documents and data on Kwon's confiscated laptop, including a letter by Kwon himself, were revealed to contain information showing that he allegedly backed Milojko Spajić, the former minister of finance and social welfare in the

Government of Montenegro The government of Montenegro (, Влада Црне Горе) is the executive branch of state authority in Montenegro. It is headed by the Prime Minister of Montenegro, prime minister. It consists of the prime minister, the deputy prime ministe ...

and the current Montenegrin prime ministerial candidate of the opposition party, Europe Now (PES), with funds for the upcoming election. Kwon and his lawyers later denied the allegations.

Personal life

Kwon named his daughter Luna, announcing the birth in April 2022 by tweeting, "My dearest creation named after my greatest invention." On 12 May 2022, an individual investor who claims to have lost approximately $2 million allegedly trespassed into Kwon's high-rise condominium building to demand an apology. As a result, Kwon's wife filed and requested emergency police protection, and South Korean police began investigating the incident. In October 2022, during an interview with ''Unchained Podcast'', Kwon was asked about the invalidation of his South Korean passport by the South Korean government, to which he responded "Oh, I'm not using it anyway, so it doesn't, I can't see how that makes a difference to me." When asked if he had another passport, Kwon said he wasn't comfortable answering questions related to that or his travel plans. In 2023, Kwon said that he held a legitimate passport from

Recognition

* 2019: Named in ''

Forbes 30 Under 30 ''Forbes'' 30 Under 30 is a set of lists published annually by ''Forbes'' magazine since 2011 consisting of 30 notable people under 30 years old in various industries. The American list consists of 600 people, with 30 selected in each of 20 sect ...

'' – Asia – Finance & Venture Capital

References

External links

Do Kwon on X
{{DEFAULTSORT:Kwon, Do 1991 births 21st-century engineers 21st-century South Korean businesspeople Living people People associated with cryptocurrency South Korean chief executives South Korean engineers Stanford University alumni Businesspeople from Seoul South Korean expatriates in the United States People charged with wire fraud