Do Kwon is the founder of Terraform Labs and the creator of the Terra blockchain and its algorithmic stablecoin UST. The collapse of UST and LUNA in May 2022 wiped out approximately $40 billion in value and triggered a cascading crisis across the crypto industry.
Terra and LUNA
Kwon founded Terraform Labs in 2018 and built the Terra blockchain, which used an algorithmic mechanism to maintain the peg of its stablecoin, UST, to the U.S. dollar. UST was backed not by dollar reserves but by an arbitrage relationship with LUNA, Terra’s native token — when UST demand rose, LUNA was burned to mint UST, and vice versa.
The Anchor Protocol, a lending platform on Terra, offered approximately 20% APY on UST deposits, attracting billions of dollars and driving rapid growth. At its peak in April 2022, UST was the third-largest stablecoin with a market cap over $18 billion, and LUNA’s market cap exceeded $40 billion.
Collapse
In May 2022, a large wave of UST selling broke the peg, triggering a “death spiral” — as UST fell below $1, the mechanism minted enormous quantities of LUNA to try to restore the peg, hyperinflating LUNA’s supply and collapsing both tokens to near zero within days. Billions of dollars in user funds were lost.
The collapse of Terra triggered a chain reaction that contributed to the failures of Three Arrows Capital, Celsius Network, Voyager Digital, and ultimately FTX, making it one of the most consequential events in crypto history.
Criminal Charges
Kwon fled South Korea after the collapse and was arrested in Montenegro in March 2023 while attempting to travel on a forged passport. He was extradited to the United States in December 2024. The SEC had previously charged Kwon and Terraform Labs with fraud; Terraform Labs settled with the SEC for $4.47 billion. Kwon faces federal criminal charges including securities fraud, wire fraud, and commodities fraud.
Education
Kwon holds a Bachelor’s degree in Computer Science from Stanford University.