Do Kwon: 'I Don't Debate the Poor'

On 1 July 2021 the British economist Frances Coppola, a former banker who writes about money and banking, made a simple point on Twitter. Self-correcting money systems like UST, she argued, fail when panicking investors all stampede for the exit at once. Do Kwon, the South Korean co-founder of Terraform Labs, the company behind UST, replied: "I don't debate the poor on Twitter, and sorry I don't have any change on me for her at the moment."

Coppola called him arrogant and told him to "go and learn some actual finance". Ten months later her warning came true almost word for word, and roughly $40 billion of other people's money disappeared in about a week.

What she was warning about

UST was a stablecoin, a digital dollar meant to be worth exactly $1. Most stablecoins, such as USDT and USDC, try to hold that price by keeping a real dollar or a Treasury bill in reserve for every coin, the way a money market fund holds cash and short-term government debt. UST kept no such reserve. It was "algorithmic": its price was held at $1 by code and by a sister coin called LUNA.

The rule was that 1 UST could always be swapped for $1 worth of newly created LUNA, and $1 of LUNA for 1 UST. If UST slipped to 98 cents, a trader could buy it cheaply, swap it for a full dollar of LUNA and pocket the difference. That trade removed UST from circulation and was supposed to push the price back up. It worked as long as people believed LUNA was worth something.

The demand came largely from Anchor Protocol, a Terra savings product that paid close to 20% a year on UST deposits, at a time when bank savings accounts paid almost nothing. Billions of dollars went in.

Coppola's point was about what happens when everyone wants out together. Each UST swapped out creates new LUNA. More LUNA for sale pushes LUNA's price down, so each swap needs even more new LUNA, which pushes the price down further. That loop is called a death spiral, and in a share-market comparison it is a company paying redemptions by printing ever more of its own shares into a falling market.

May 2022

On 7 May 2022 large withdrawals from Anchor and big sales of UST knocked it below $1. Holders rushed to swap out. LUNA, which had traded above $80 days earlier and had peaked near $119 in April, was printed by the billion; its supply went from around 350 million coins to more than 6.5 trillion. By 13 May LUNA was worth a tiny fraction of a cent and UST under 20 cents. Combined, the two coins lost about $40 billion of market value. Ordinary savers in South Korea, the United States and elsewhere lost their deposits.

The "poor" tweet became the most quoted line of the collapse. In October 2022, speaking to Laura Shin on the Unchained podcast from an undisclosed location, Kwon said his Twitter persona had been "largely for entertainment value", called it "shitposting", and said that "in retrospect, I should have held myself to a more stringent standard." He did not delete the tweets.

Where the joker ended up

Kwon had moved to Singapore, where Terraform Labs was based, before the crash. South Korean prosecutors obtained a warrant for his arrest in September 2022 and Interpol issued a Red Notice. Korean authorities said he had travelled on through Dubai to Serbia. In March 2023 police in Montenegro arrested him at Podgorica airport trying to board a flight with a forged Costa Rican passport.

After a long fight between South Korea and the United States over who would get him, Montenegro sent him to New York on 31 December 2024. Terraform Labs had already agreed in June 2024 to pay $4.47 billion to settle a civil fraud case brought by the US Securities and Exchange Commission. In August 2025 Kwon pleaded guilty to conspiracy to defraud and wire fraud. On 11 December 2025 Judge Paul Engelmayer sentenced him to 15 years in prison, more than the 12 prosecutors had asked for, ordered him to forfeit about $19 million and called the scheme "a fraud on an epic, generational scale."

He may ask to be moved to South Korea after serving half of the sentence, and US prosecutors agreed not to oppose that. Korean prosecutors have said they want to try him there too. The full story of the criminal case is on The Rap Sheet; the man himself is on Villains and Heroes.

The economist he called poor was right on every point that mattered. He is the one in a cell.