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The rise and fall of Terra founder Do Kwon

The rise and fall of Terra founder Do Kwon
Terraform Labs founder Do Kwon was arrested in March after an international six-month manhunt.

Update: This article is continuously updated, most recently on January 31.

When Terra co-founder Do Kwon was arrested in March 2023 in Montenegro it was the end of six-month, globetrotting run from justice.

Kwon is wanted by prosecutors in his native South Korea and the US, both of which demand his extradition.

Terra, which crested at $60 billion in market value, collapsed in May 2022, and contributed to the downfall of other big name projects, including Sam Bankman-Fried’s FTX.

But unlike Bankman-Fried, Kwon is far from home, incarcerated in a Balkan jail after a Montenegrin court convicted him of using forged passports.

Here’s how the entrepreneur went from crypto king to crypto defendant.


  • Kwon Do-Hyung, aka Do Kwon, received a degree in computer science from Stanford University. He clocked up time as a software engineer for Microsoft and Apple prior to returning to South Korea.


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  • Founded Anyfi in 2016 in South Korea. Anyfi was billed as a “wireless mesh network startup,” during which Kwon co-invented several blockchain and decentralised network patents.


  • Kwon founded Terraform Labs in April 2018 with Daniel Shin. By August, Terraform Labs managed to raise $32 million in seed funding from various investors including Binance Labs, Huobi Capital, and Translink Capital. Initially, Terra was billed as an ecommerce payments platform, echoing the business models of Alibaba and Paypal, albeit utilising blockchain technology.
  • In April, MakerDAO’s head of risk, Cyrus Youness, predicted a collapse of Terra’s model, essentially outlining the events of 2022, according to a tweet he posted years later after the collapse. Younessi cited the similar Nubits crashes in 2016 and 2018 as prior evidence of the model’s vulnerability to a run on liquidity.


  • In January, Terra’s LUNA altcoin was sold in an initial coin offering.
  • Kwon named in Forbes 30 Under 30 - Asia - Finance & Venture Capital, highlighting the achievements of 2018.
  • Kwon and others release a whitepaper for Terra economics, first implemented in the Korean won-pegged TerraKRT, and later TerraUSD.
  • Terraform Labs dominated Korea Blockchain Week. It announced partnerships with South Korean payments processor BCcard and Shinsegae(SSG) Duty Free, as well as support for a crypto debit card, CHAIcard.


  • Korean exchange GDAC launched the first staking derivatives product for LUNA token, dubbed “LUNA GROW.”
  • Terra Labs launched native US dollar-pegged stablecoin TerraUSD (UST) on Ethereum and Solana. Kwon called UST “the first decentralised stablecoin that is scalable, yield bearing and interchain.”

‘TerraUSD monetary policy is infinitely scalable — helping DeFi apps and protocols achieve their full potential without restrictions’

—  Do Kwon
  • Do Kwon’s said: “TerraUSD is an algorithmic stablecoin, where the cost of minting is equal to the face value of the stablecoins minted — in order to mint 1 TerraUSD, only $1 worth of the reserve asset ($LUNA) must be burned. TerraUSD monetary policy is infinitely scalable — helping DeFi apps and protocols achieve their full potential without restrictions.”
  • Terra’s derivatives protocol, Mirror, launched in December. Mirror allowed crypto users to trade in derivatives based on real-world stocks, such as AAPL and TSLA.


  • In September, the Securities Exchange Commission issued Terraform Labs a subpoena regarding Mirror Protocol, citing possible violations of US securities laws. Kwon refused to comply and countersued.
  • In November, Kwon responded to what would prove to be an accurate prediction of what might happen to Luna/Terra given a whale attack, by branding it “the most retarded thread I’ve read this decade.”
  • LUNA rose as high as $90, up from an ICO price of $0.80, marking over one hundred times growth in under two years.



  • January 20: Kwon announced the creation of the Luna Foundation Guard, which was touted as a non-profit organisation tasked with building reserves to support UST’s peg, as well as fund initiatives involving the Terra/Luna ecosystem and blockchain technology in general.


  • February 22: It was reported that LFG had raised more than $1 billion in LUNA sales. It spent the capital on Bitcoin to bolster UST reserves. Primary investors included JUMP Capital and Alameda Research, FTX’s sister company that would play a crucial role in the exchange’s collapse.


  • March 13 and 14: Popular CT traders Algod and GiganticRebirth publicly shorted Terra/Luna, betting $1 million and $10 million respectively, that LUNA’s price will drop within a year.
  • March 23 to 28: The LFG acquired $1.3 billion in Bitcoin as part of its reserve strategy.
  • March 28: LUNA continued its rise to an all-time high of $119.2.


  • April 17: Kwon announced in a tweet that he’d named his newborn daughter Luna after the coin. He added: “If I ever have a son, I shall name him Stable. Stable Kwon.”
  • April 19: UST became the third largest stablecoin by market cap.
  • April 27: LUNA’s circulating supply dropped to 346 million due to demand for UST. This is because Terra/Luna’s mechanism burnt $1 worth of LUNA for every 1 UST minted.
  • April 30: According to documents filed by Kwon at the Supreme Court of Korea’s Registry Office, Kwon filed to dissolve the company’s Korean entity.


  • May 4: Korean courts approved Kwon’s request to dissolve the company’s Korean entity.
  • May 7: Prominent investors sold $285 million worth of UST, stirring initial fears that a run may be possible. Some trade occurred on stablecoin swapping protocol Curve, and was captured and announced via twitter bots.
  • May 8: UST depegged .015 cents to $0.985, Luna Foundation Guard (LFG) loaned $1.5 billion to defend peg. It didn’t work.
  • May 9: UST made headlines, depegging to $0.35 and wiping out billions in market value for investors. Kwon’s famous tweet, saying “Deploying more capital — steady lads” became immortalised as a meme shortly thereafter.
  • May 11: UST fell 10 cents over the week. In total, $45 billion in market cap was wiped out in one week. CoinDesk reported the drop as “good for UST.”
  • May 12: Luna crashed by 99.7%.
  • May 12: In South Korea, an investor who lost money in the crash, knocked on Kwon’s door, demanding an apology. Kwon’s family was placed under police protection.
  • May 13: Kwon introduced a “revival plan” with ownership being transferred to users and holders, publicly conceding Terra/Luna’s collapse.
  • May 17: South Korean parliament members and authorities called for a parliamentary hearing regarding Terraform Labs and Kwon
  • May 18: National Tax Service of Korea demanded Kwon and Shin pay $100 million in additional taxes owed, but Kwon and Shin refused and insisted that Terraform Labs Pte. and Terraform Labs Virgin Islands were not Korean entities. South Korean authorities maintain that practical management decisions took place while Korean residents, thus fall under Korean jurisdiction.
  • May 28: Luna 2.0 launched. TerraClassicUSD and LUNC new designations for original assets.

June 2022

  • June 8: The United States Court of Appeals for the Second Circuit affirmed a district court order requiring compliance with investigative subpoenas served by the Securities and Exchange Commission on Terraform Labs and Kwon.
  • June 17: The class action lawsuit Patterson v. Terraform Labs Pte Ltd. et al was filed in California, claiming Kwon and Terraform Labs had solicited unregistered securities and misleading investors.
  • June 27: Three Arrows Capital plunged into liquidation. The founders of the bankrupt crypto fund later blamed the $200 million in losses related to LUNA and UST as contributing factors that triggered the collapse.

July 2022

  • July 5: US crypto lender Voyager Digital announced that it had filed for bankruptcy, becoming another casualty of the Terra collapse. The firm had made loans worth $670 million to Three Arrows Capital before the implosion of Terra.

September 2022

  • September 14: South Korean court issues arrest warrant for Kwon on five others- violations of Korean capital markets law
  • September 19: Seoul Southern District Prosecutor’s Office began procedure to place Kwon on an Interpol red notice and to revoke the Terraform Labs founder’s passport
  • September 23: Adding to Kwon’s headaches, 350 investors who lost $57 million, filed against Kwon, Terraform Labs, Luna Foundation Guard, and head researcher Nikolaos Alexandros Platias.
  • September 26: South Korean prosecutors announce that Interpol has issued a red notice for the arrest of Kwon, kickstarting an international six-month manhunt. Kwon taunted the news on Twitter, saying that he was writing code in his living room and denied that there was a red notice for him.

October 2022

  • October 5: The South Korean Ministry of Foreign Affairs announced Kwon’s passport will be cancelled in 14 days and ordered that the passport be returned to authorities.
  • October 12: Kwon registered a company in Serbia, with Han Chang Joon, called “Codokoj22 d.o.o. Beograd,” according to official records obtained from the Serbian Business Registry and unearthed by DL News. The address listed is in the old town of the Serbian capital’s city centre.

November 2022

  • November 8: Kwon appeared on UpOnly podcast with other alleged and convicted scammers such as the so-called Pharma Bro Martin Shkreli and the disgraced FTX founder Bankman-Fried. Shkreli, who was charged and convicted in federal court on two counts of securities fraud and one count of conspiracy in 2017, told Kwon, “I just want to let you know that jail’s not that bad.”
  • November 11: Bankman-Fried stepped down as CEO of FTX and the crypto exchange files for bankruptcy. Analysis of on-chain data had shown that Alameda Research suffered a huge loss when Terra collapsed in the spring and that client funds were moved from FTX to Alameda to cover the loss.The Commodity Futures Trading Commission later alleged that a fake client account was created to hide Alameda’s liabilities.

December 2022

  • South Korean prosecutors said that Kwon had been hiding in Serbia since September.


January 2023

  • January 9: Investment firm Albright Capital voluntarily dismissed its fraud charges against Terraform Labs and Kwon.
  • In late January, a South Korean team of prosecutors travelled to Serbia to meet with Serbian authorities.

‘It was not easy to track him’

—  Ana Ćurić
  • In January, DL News investigative reporters Ana Ćurić and Isabel Hunter started trying to find Kwon after news reports said he was in Serbia. “It was not easy to track him,” Ćurić said. “The investigation from the Serbian side just started and they could not talk about the case at all. The Ministry of Interior didn’t answer our requests. There were no traces of him being in Serbia at that moment. The authorities never revealed how he entered the country.”

February 2023

‘Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities’

—  Gary Gensler
  • February 16: The SEC charged Terraform Labs and Kwon with “orchestrating multi-billion dollar crypto asset securities fraud.” “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler.

March 2023

  • March 1: DL News published an exclusive interview with Jaewoo Cho, a blockchain expert and assistant professor at Hansung University in Seoul, who had been hot on Kwon’s trail for months by following his transactions on the blockchain. “I’m really kind of obsessed with his addresses and on-chain data,” Cho told DL News.

‘I’m really kind of obsessed with his addresses and on-chain data’

—  Jaewoo Cho
  • March 13: The Wall Street Journal, citing people familiar with the matter, reported that the US Department of Justice was investigating the collapse of TerraUSD. It was also revealed that FBI and New York officials had questioned former Terraform Labs team members.
  • March 23: Kwon was arrested in Montenegro with associate Han Chang-Joon.
  • March 23: Hours after his arrest, Kwon is charged by a federal grand jury in New York of eight counts including securities fraud, commodities fraud, wire fraud, and conspiracy.
  • March 24: DL News reported Kwon and Chang-Joon were arrested in a private jet on the tarmac, after trying to use falsified Costa Rican passports to travel to Dubai. Montenegrin authorities discovered additional Belgian identification documents, and charged the two with forgery and travelling with false passports. Kwon allegedly insisted that the documents were genuine.
  • March 29: DL News reported that US diplomats requested Kwon’s extradition to the United States. Both the US and South Korea seek access to evidence obtained during Kwon’s arrest. DL News verified that Kwon had been hiding in Serbia for months.
  • March 31: DL News interviewed Montenegrin State Prosecutor Haris Šabotić, who told our reporters that the arrest was solely based on falsification charges pertaining to the allegedly faked documents. In other words, Interpol’s red notice had not been a factor. If convicted, Kwon and Chang-Joon face up to five years’ imprisonment in Montenegro. Šabotić stated that if the falsification case against Kwon and Chang-Joon failed, it would be sent to a Montenegrin high court so Interpol’s case may be processed.
  • June 19: A Montenegrin court convicted Kwon of the use of forged passports. Kwon appealed the verdict.
  • November 16: DL News reported the Montenegrin court’s rejection of Do Kwon’s appeal. The Higher Court of Podgorica’s decision was Kwon’s last chance for an appeal.


  • January 21: Terraform Labs filed for a Chapter 11 bankruptcy in the US.
  • January 24: DL News reported that Do Kwon’s company in Belgrade, registered while on the run from Interpol, is still active, according to the official documents from Serbian business registry.
  • January 30: Terraform Labs said that its recent bankruptcy filing will enable it to pursue a “do-or-die” appeal in a securities fraud case brought by the SEC, Reuters reported.
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