Arrested South Korean crypto entrepreneur Do Kwon faces multiple fraud charges in a story of rise and fall


25th March 2023 – (Montenegro) South Korean entrepreneur Do Kwon, previously hailed as a genius, now facing multiple criminal charges over his failed cryptocurrency, was once a flamboyant figure in the industry whose fame quickly turned into global notoriety. Following months on the run, the 31-year-old – whose full name is Kwon Do-hyung – was apprehended on Thursday (23rd March) in Montenegro while attempting to board a flight with counterfeit Costa Rican travel documents.

The fascinating and dramatic story of Do Kwon’s ascent and downfall has captivated the world. Kwon, the South Korean entrepreneur who co-founded Terraform Labs with Daniel Shin in 2018, created an “algorithmic stablecoin” called Terra that quickly gained widespread popularity. However, experts have long criticised Kwon’s model, calling it fundamentally flawed and even likening it to a Ponzi scheme. TerraUSD was algorithmic and only pegged to sister currency Luna, using mathematical calculations and incentive mechanisms to maintain their peg, unlike other stablecoins backed by real-world assets such as cash or gold.

In May last year, Kwon slipped out of South Korea before his company’s implosion rocked the global crypto markets, and he has been in hiding ever since. However, he was caught by authorities trying to use fake Costa Rican travel documents to board a flight, leading to his arrest in Montenegro on Thursday (Mar 23). Kwon is facing criminal charges related to his company’s collapse that wiped out $40 billion of investors’ money. South Korea and the United States have charged him with “multi-billion-dollar crypto asset securities fraud,” and South Korea has requested his extradition.

The case has raised questions about the need for the crypto industry to take measures to prevent bad actors from committing financial crimes. Christian Catalini, founder of MIT’s Cryptoeconomics Lab, has called for a full investigation into Kwon’s case to improve the industry as a whole. Meanwhile, Kwon’s story is being compared to that of Elizabeth Holmes, the disgraced founder of the medical technology startup Theranos, due to the striking similarities in their impressive rise and sudden fall.