Who is Do Kwon, the 'lunatic' who made a cryptocurrency worth $60 billion that fell apart in a day ?

More On: Do Kwon

Do Kwon, the eccentric 30-year-old developer of the UST and Luna coins, cemented his reputation as one of crypto's most known individuals, for all the wrong reasons.

TerraUSD (UST), Kwon's stablecoin that is supposed to always be worth $1, fell to as low as 13 cents last week and as low as nine cents this week. As a result, Kwon's cryptocurrency, Luna, crashed, causing investors to lose a lot of money.

But who is Kwon, and how did he come to be in charge of a project that climbed quickly and then crashed even faster—to the point that some have compared him to Elizabeth Holmes of Theranos or Ken Lay of Enron?

Early years

Kwon was born in 1991 in South Korea. According to his LinkedIn page, he began attending Stanford University in 2010 and graduated with a computer science degree in 2015. According to New York Magazine's Intelligencer, Do Kwon worked at a Microsoft "business partner" and at Apple, according to a public website made by him.

According to CoinDesk, Do Kwon helped launch the failed stablecoin project Basis Cash in 2020 using the alias "Rick Sanchez" (from the animated show Rick and Morty). His algorithmic stablecoin, which failed, was similar to his earlier idea, UST. Basis Cash, like UST, was created to preserve a link to the US dollar through code rather than holding reserves in cash and other less risky assets. However, Basis Cash's developers abandoned it because it never attained a dollar value.

Capital raising

Terraform Labs was created in 2018 by Do Kwon and Daniel Shin, who later left the firm. Terraform began receiving investor interest almost immediately. Arrington Capital, Pantera Capital, and Galaxy Digital were among the investors who contributed $150 million to the firm.

According to VentureBeat, Terraform Labs received additional $32 million in August 2018 to develop a "new financial system on the blockchain." Binance, OKX, Huobi Group, and Upbit were among the company's high-profile sponsors, as were the investment arms of four of the world's six major cryptocurrency exchanges at the time: Binance, OKX, Huobi Group, and Upbit.

According to the New York Times, which cited PitchBook, investors Arrington Capital and Coinbase Ventures have invested more than $200 million in projects built on Luna's underlying technology between 2018 and 2021.

Following the collapse of UST and Luna, many of these investors suffered significant losses. Binance CEO Changpeng Zhao revealed this week that his company's $3 million investment in Luna in 2018 grew to nearly $1.6 billion at the time of the crash in April, but was now worth less than $3,000. However, not all investors suffered losses as a result of the crash. According to the New York Times, Pantera Capital made $170 million off a $1.7 million investment after selling roughly 80% of its Luna assets over the past year.

Ascend to fame

Kwon earned Forbes' 30-under-30 list after successfully obtaining funds for his venture, partially because, as Forbes stated at the time, he had drawn "40 million users to work with the company at debut in January 2018." After years of trading for approximately $1, Luna, the sibling cryptocurrency created to help the UST stablecoin maintain its dollar peg, began to appreciate in value in January 2021. Luna had risen to $99 by the end of December 2021, and had reached a high of $119 in April, according to CoinMarketCap.

Concerns over how his algorithmic stablecoin will maintain its dollar peg led Kwon to announce that he would purchase $10 billion in Bitcoin to back UST.

Do you agree with Kwon's criticism?

Kwon, who exudes confidence, was particularly scathing of his competitors and detractors on social media.

Do Kwon chastised investors who were investing money into rival stablecoin projects in a December 2020 tweet, claiming that UST was the oldest and most frequently utilized stablecoin in existence.

In the tweet, he said, "Bow before the king."

Kwon was also known for calling UST and Luna critics "poor" and claiming that they would "remain poor" if they did not support him or his cryptocurrencies.

In response to tweets critical of decentralized finance from British economist Frances Coppola in July, Kwon said, "I don't dispute the poor on Twitter, and unfortunately I don't have any change on me for her at the time."

"There's also fun in seeing enterprises collapse," Kwon cynically boasted just a week before Terra lost its peg to the US dollar.

Do Kwon: "95% are going to die [coins], but there's also entertainment in watching companies die too"

8 days ago. Ironic. pic.twitter.com/fEQMZIyd9a
— Pedr🌐 (@EncryptedPedro) May 11, 2022

Kwon remained unyielding even as his stablecoin began to falter, never publicly apologizing to investors and tweeting on May 11 that "Terra's return to form would be a sight to behold."

Terra's rescue idea

Do Kwon suggested on Wednesday that the Terra blockchain, which powers the cryptocurrencies UST and Luna, "fork" or break into two different blockchains to start over. If the plan is approved by Luna token holders, two Terra blockchains will exist at the same moment, but for distinct purposes.

Kwon intends to abandon the UST stablecoin in favor of Luna as the new chain's cryptocurrency. Kwon also suggested that supporters of the new network be given millions of Luna tokens.

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