After long months in the dark and mocking the authorities, the adventures of Do Kwon ended in the least expected way: arrested at a Montenegrin airport, trying to fly to Dubai using a forged Costa Rican passport. Not even Aaron Sorkin dared to write a script with such an outcome.
Of course, this movie still has several acts left before the end credits roll. The creator of UST and Luna, the cryptocurrencies that starred in one of the most resonant scandals of 2022, must now face the consequences of his actions against the authorities. And what if there are interested in giving explanations to Justice. Not for nothing, Both South Korea and the United States announced that they will seek his extradition..
After his arrest in Montenegro, the US Department of Justice filed 8 criminal charges against Do Kwon. Among them, securities fraud, fraud of commodities, electronic fraud and market manipulation. To which are added the civil charges that the SEC had already filed against him.
A curious fact: if the US extradition prevails, your case will fall in the US Attorney’s Office for the Southern District of New York. That is to say, the same one that today is in charge of the case against Sam Bankman-Fried for the collapse of FTX. And not by chance, exactly. US Attorney Damian Williams has been among the most vocal in making those responsible for cryptocurrency crimes pay for their actions. “Fraud is fraud, it doesn’t matter if it happens on the blockchain or on Wall Street,” he once said.
You can like cryptocurrencies more or less. You can believe that they have a greater or lesser utility. You may even think they are a pyramid scam; as well as others are convinced that they are the path to financial freedom. It doesn’t matter which side you’re on, the fall of the likes of Do Kwon and Sam Bankman-Fried confirms the idea that the era of the young wonder of the crypto world seems to be coming to an end.
Do Kwon and SBF, two ‘wonder boys’ who never were
Although they went their separate ways, the journeys of Do Kwon and Sam Bankman-Fried had similar outcomes. The former CEO of Terraform Labs promoted the idea of a decentralized ecosystem based on an algorithmic stablecoin (UST) and a native token (Luna), added to an incentive plan for loans and deposits through a platform called Anchor Protocol. However, there were not a few who came out to point out the shortcomings of his plan, only to receive absurd responses and even insults via Twitter.
One of the most viral tweets from the young South Korean entrepreneur was against Dai, Maker DAO’s decentralized stablecoin. “By my hand, Dai will die,” he wrote at the time. A phrase that was cheered by his followers, a group calling itself Lunatics (Lunatics), who set up a kind of cult around Do Kwon’s promises.
Although not even its staunch supporters were spared from disaster when UST lost peg to the dollar and entered a “death spiral.” In this scenario, Luna also fell and the debacle was total. Within hours, more than 40,000 million dollars were erased from the crypto ecosystem and the shock wave not only affected the public, but also countless companies. This article from hypertextual May 2022 explains the UST and Luna disaster in detail, in case you want to know the story in depth.
In the days after his empire fell, Do Kwon remained active on Twitter promising solutions. However, under the pretense of threats against him and his family, she immigrated to Singapore and began planning her grand escape from him. In fact, doubts about his whereabouts began to surface in September, when South Korean prosecutors ordered his arrest on fraud charges and Singaporean police were unable to find him.
The businessman denied having escaped and continued to show mocking and defiant against the authorities through Twitter, but without revealing his location. Soon after came the red alert from Interpol and the recent breakout story: rumors of a possible European hideout, the visit of Korean officials to Serbia in February, and the arrest in Montenegro yesterday.
When Sam Bankman-Fried wanted to play savior
It is likely that Do Kwon and Sam Bankman-Fried would never have crossed paths, except that were the product of a recipe traced. They became billionaires overnight, achieved unparalleled levels of exposure thanks to their grandiose schemes, and ended up falling in shocking fashion, fueled by their own arrogance.
The funny thing is that, in the case of the former CEO of FTX, his public image became gigantic after the collapse of UST and Luna. In fact, SBF installed the speech that it was willing to save the cryptocurrency ecosystem. And he did it under the promise of lending a hand to many of the companies that suffered the shock wave of their exposure to Terra.
In the months following the fall of Do Kwon and Terraform Labs, there were plenty of cases of crypto companies on the brink. Insolvency claims, red balance sheets and a host of problems affected names like Three Arrows Capital, BlockFi and Celsius. The “cryptocurrency winter” seemed to leave no head puppet, but one company remained immune to problems: FTX.
To the exchange by Sam Bankman-Fried the bullets did not enter, when everyone around him fell. All while the young businessman played the savior of the crypto world from the luxury of the Bahamas. He had also become an object of desire for the specialized financial press, which was full of praise for the young wonder who had created a fortune of 26,000 million dollars.
It was “a different”, if we take it to football terms. He was the one who wanted to make the crypto world transparent, the one who advocated regulation to end cases like Do Kwon and Terra. However, not even the millions of dollars he doled out in Washington lobbying to ban the decentralized finance sector saved him when a little breeze knocked down his house of cards.
From one moment to the next, Sam Bankman-Fried ceased to be the savior of cryptocurrencies to reveal himself as a scammer. Another one. One on a par with Do Kwon —or even worse—, who today faces the possibility of spending the rest of his life in prison.
Looking sideways at Justin Sun
With Sam Bankman-Fried arrested and Do Kwon awaiting extradition, who would want to be the next cryptocurrency “young wonder”? Some are encouraged to look at Justin Sunthe founder of the TRON Foundation —which is in charge of the homonymous network and its native token (TRX)—, and also owner of BitTorrent.
The 32-year-old businessman may be unknown to most, but he’s hardly a new figure in the crypto world. In fact, his outgoing personality, especially on Twitter, has made him news more than once.
If we look at the recent past, he was one of those who offered a bailout to FTX when it was falling apart, but it didn’t materialize. While last December he mocked of Do Kwon and UST, by assuring that USDD, its own algorithmic stablecoin, was “200% backed”. A statement that has been classified as misleading.
But this is not all. Days ago, in the midst of negotiations for UBS to buy Credit Suisse, he said that if the offer did not go through, was willing to acquire the Swiss bank to “integrate it into the web3 world”.
And I still haven’t told you the most curious thing: although Justin Sun was born in China, He has the nationality of Grenada and works as a diplomat for said country. In fact, in December 2021 he became the Grenadian representative before the World Trade Organization.
However, these days he has had his own share of problems. The SEC sued him along with celebrities like Lindsey Lohan and Jake Paul for fraud and other offenses against US securities law. Since then, suspicions about his business have skyrocketed.
With Sam Bankman-Fried and Do Kwon already crossed off the list, no one dares to rule out that Justin Sun is The next crypto “young wonder” in the crosshairs of North American justice.