30-Year-Old Cryptocurrency Tycoon, Called the 'Korean Musk'...
Luna Plummets 99% from 100,000 Won to 1 Won
"The Elizabeth Holmes of the Crypto World"
[Asia Economy Reporter Yoon Seul-gi] As the Korean virtual currencies Luna and TerraUSD (UST) plummeted, shocking the global market and investors, attention is focused on Do Kwon, CEO of Terraform Labs, the issuer of the two coins. Foreign media criticized CEO Kwon by comparing him to Elizabeth Holmes, the former Theranos CEO who fell from a Silicon Valley star to a fraudster.
According to Bloomberg on the 12th (local time), Kwon, born in 1991, is a young entrepreneur who followed an elite course and attracted attention this year by purchasing $1.5 billion (about 1.93 trillion KRW) worth of Bitcoin.
He graduated from a Korean foreign language high school and majored in computer engineering at Stanford University in the United States. After working as an engineer at Apple and Microsoft (MS), he founded Terraform Labs in 2018 together with Shin Hyun-sung, founder of social commerce TMON.
Kwon grew into a major figure through Luna and Terra coins issued by Terraform Labs. Just a month ago, he was noted as a "Bitcoin whale," a term for a major player in cryptocurrency. This was because the "Luna Foundation Guard" he established purchased $1.5 billion worth of Bitcoin as part of a safety mechanism supporting Terra's value.
Kwon is known to work by commuting between Korea and Singapore, where Terraform Labs is headquartered. He avoided contact with domestic and international media and communicated with investors called "Lunatics" through social networking services (SNS). His Twitter account under the ID "Do Kwon" currently has over 660,000 followers. Because his communication style on Twitter resembled that of Elon Musk, the world's richest man, he was called the "Korean version of Musk."
However, the value stability of Terra's stablecoin "UST" collapsed, leading to the Luna and Terra crash. Stablecoins are cryptocurrencies that secure stability by linking their value to assets like the dollar, and Luna is a mining coin created to stabilize UST's price. Terraform Labs issued coins using an algorithm that adjusts the supply of the base currency Luna to keep the value of one Terra stablecoin at one dollar. They also attracted investors by promising up to 20% interest by exchanging Terra for Luna when Terra was deposited.
In fact, in the early stages of the business, Terraform Labs' Luna and Terra trading algorithm faced criticism as a Ponzi scheme because it was backed by stablecoins rather than real assets. While there was no problem during the cryptocurrency boom, system issues became apparent as the cryptocurrency market showed a downward trend recently.
When Terra fell below one dollar, Terraform Labs issued a large amount of Luna. They tried to defend Terra's price by buying Terra with Luna to reduce its circulation. However, caught in the trap of increased currency supply, Luna's value plummeted, and investors began to sell off Terra and Luna. Luna was traded in the 100,000 KRW range domestically and internationally until the 1st of this month but started to fall around the 6th, plummeting over 99% between the 9th and 10th, and recorded 1 KRW in the afternoon of that day.
Kwon reportedly sought to raise $1.5 billion to resolve the coin crash but was unsuccessful. Bloomberg reported that Terraform Labs contacted several companies in the cryptocurrency industry but apparently failed to secure funding.
David Morris, senior columnist at CoinDesk, said, "CEO Kwon is the Elizabeth Holmes of cryptocurrency," predicting ongoing lawsuits and criminal charges surrounding the Terra and Luna crash. He criticized, "Kwon once responded to criticism of Luna's fundamental structure by calling critics 'cockroaches' and 'fools.' He tried to find capital to pour into the holes of a sinking ship after making holes in it."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
