Do Kwon is the co-founder and CEO of Terraform Labs. Re-emerging after Binance CEO CZ’s statements, Do Kwon faces legal and social pressure for his role in the Terra crash. Citizens from various jurisdictions, including South Korea, Singapore, and the United States, have brought legal action against Kwon.
Who is Do Kwon?
Do Kwon is the South Korean co-founder and CEO of Singapore-based Terraform Labs, the parent company of the collapsing stablecoin TerraUSD and cryptocurrency Luna. Kwon was born on the same day in 1991 in Seoul, South Korea. He attended high school at Daewon Foreign Language High School in South Korea. After earning a BS in computer science from Stanford University in 2015, he briefly went to work as a software engineer for both Microsoft and Apple. In January 2016, Kwon returned to South Korea to develop and establish his venture Anyfi.
In January 2018, along with entrepreneur Daniel Shin, Terraform Labs Pte. Ltd. was founded. Later in 2018, Terraform Labs launched a cryptocurrency called Luna. Terraform started selling the stable currency TerraUSD (UST) in 2020. The Terra blockchain, which includes both UST and Luna, had stable mining incentives, which allegedly created a flexible monetary policy alongside an efficient fiscal policy. Unlike other cash-pegged coins, the UST stablecoin used an algorithm tied to the Luna resource to maintain a value of around $1. Luna’s value finally rose to over $116 in April 2022.
During his time at Terraform Labs, Kwon also worked on various blockchain projects such as Mirror, Prism, Astroport and Anchor. The Mirror token, known as MIR, runs on a decentralized finance platform related to Terra. MIR makes it easy to create and trade synthetic versions, allowing people to ignore current restrictions on stocks and other assets.
Following the collapse of sister currencies Luna and TerraUSD in May 2022, Terraform Labs began trading a new cryptocurrency called Luna 2.0 in June 2022. As a result of the crash, TerraUSD and Luna are now referred to by critics as TerraClassicUSD and LUNC, respectively.
Do Kwon and the Terra Crisis
The SEC launched an investigation into Terraform Labs in June 2022 to determine whether the marketing of the TerraUSD stablecoin violated federal regulations regarding securities and investment products. Following the May 2022 crash, the SEC investigation sought to determine whether TerraUSD and its underlying algorithms worked as marketed or violated federal investor protection regulations. Although Terraform Labs is based in Singapore, TerraUSD falls under SEC regulations as Americans buy the token to finance businesses or make a profit. In February 2023, the SEC accused Kwon and Terraform Labs of fraud.
On May 17, 2022, members of the Korean parliament and government officials called for a possible parliamentary hearing against Terraform Labs and its founder Kwon, citing the lack of regulatory framework as the main reason for the blocked investigation into the events that occurred.
On May 18, 2022, following investigations by the Korea National Tax Service, Terraform Labs founders Kwon and Daniel Shin were asked to pay additional taxes worth approximately $100 million in December 2021. Regardless, the National Tax Service argued that the transfer of funds between subsidiaries and profits generated by each entity must conform to Korea’s jurisdiction, as “the founders make practical management decisions during their official residence in Korea.”
Prior to the SEC investigation into TerraUSD, the U.S. Securities and Exchange Commission issued a subpoena to Terraform Labs and Kwon in 2021 specifically regarding the “Mirror Protocol”, which designs and offers financial derivatives that almost “reflect” Terraform Labs’ listed stocks. . Kwon responded by stating that he would not comply with the demands and would instead sue the SEC. Despite Kwon’s attempts to challenge and evade the SEC’s investigations, a February 2022 U.S. Court hearing in Manhattan ruled in favor of the SEC’s right to continue its investigation into Kwon and Terraform Labs. According to documents submitted by Kwon in the Supreme Court of the Korean Registry, Kwon applied to dissolve the company’s Korean presence on April 30, 2022 and was approved on May 4, 2022.
