Do Kwon is one of the most bullish and energetic crypto advocates out there. As the co-founder and CEO of Terraform Labs, he would in better times take on critics and puff the crypto future to the high heavens: and he was a convincing guy, too, persuading many that the Terra ecosystem was where it's at.
That past may be about to catch up with him. An arrest warrant has been issued in South Korea for Do Kwon and five other individuals associated with Terraform Labs, as reported by Bloomberg, on allegations that they broke capital markets law. The South Korean prosecutor's office said that all six individuals are located in Singapore. Why Singapore? One reason may be that it has no extradition treaty with South Korea, meaning a long and potentially tricky legal process lies ahead if the South Korean authorities push for his extradition.
This year's crypto crash has many elements to it, but TerraUSD is arguably the single most important. TerraUSD (also called UST) was a so-called stablecoin, meaning it had one purpose in the world: each TerraUSD coin had to stay at exactly the value of one US dollar. Which it previously had done before falling in value this May: first by slight amounts, then going into freefall. Let me give you an idea of how much value that's been lost: TerraUSD, now renamed Terra Classic, was supposed to be worth one dollar per one token; it is currently worth $0.000279 a token.
Crypto ecosystems are intertwined, with many new coins pegging themselves to stablecoins like TerraUSD, so this was the domino that made everything else fall. Do Kwon was also behind the Luna token, which collapsed in value alongside TerraUSD. Investors in the former were fond of describing themselves as 'Lunatics', which now feels sadly ironic.
Perhaps the biggest glimpse into Do Kwon's mindset is that, when all this started to happen, he created a new version of Luna. Unbelievably, crypto being crypto, this has found some success, though the news of the arrest warrants has seen the new versions plunge in price.
The South Korean authorities raided the home of Do Kwon's co-founder Daniel Shin in July, though he is not among those who've been issued with arrest warrants. As well as South Korea the collapse has attracted the attention of US regulators.
A spokesperson for the South Korean authorities told the Financial Times that prosecutors were exploring "many ways" to extradite the individuals concerned, and may involve Interpol (issuing a 'red notice' was how this other crypto king got nabbed), and / or nullify his South Korean passport to stop him travelling.
Do Kwon was once a crypto talking head, the kind of evangelist who was always ready with a catchy quote or to fight back against the critics. He has now, however, done the digital equivalent of going underground, though for some reason he tweeted out a 'full moon' emoji yesterday.
He did break cover around a month ago in a soft-scoop interview with Coinage, during which he said "we've never been in touch with [South Korean] investigators" and demurred over whether he'd ever return to South Korea. Even before this warrant that was unlikely: the crash prompted several suicides in South Korea and Do Kwon is now an incredibly unpopular figure in the country.
During its pomp, TerraUSD offered a ridiculously high 20% yield for investors, through a mechanism called the Anchor Protocol. If you're thinking 'ponzi scheme' then you're not alone, with US regulators suggesting similar of the Celsius crash, and this protocol is one of the areas South Korean authorities are investigating.
For his part Do Kwon seems slightly delusional, insisting in the interview with Coinage that the problem was UST not being big enough, and talking of an unnamed "mole" who apparently played a key role in the collapse.
"This was essentially my life," Do Kwon says. "I bet big, and I think I lost.”
You think? When asked why his account seems inconsistent in some respects, and where the blame will ultimately rest, he demurs.
"Interesting philosophical discussion. I think there's aspects to this where participants are humans, I think there's aspects to this where we're beasts. Interesting discussion."
On the prospect of jail, Do Kwon also gets a little philosophical: "Life is long." It may well be but, when you're behind something that's affected so many people so badly, the sentence might be as well.