Do Kwon: The $40 Billion Vaporizer

Created LUNA/UST. Told critics they were poor. Destroyed $40 billion. Sentenced to 15 years.

Do Kwon was the most arrogant man in crypto, and that's a competitive field. The Stanford-educated South Korean founder of Terraform Labs created LUNA and its algorithmic stablecoin UST, which maintained its $1 peg through a mechanism involving burning LUNA tokens. He was openly contemptuous of critics, famously tweeting "I don't debate the poor" to anyone who questioned the model.

The model worked until it didn't. In May 2022, a series of large UST sells on Curve Finance triggered a depeg. The algorithm tried to restore the peg by minting LUNA, which crashed LUNA's price, which further depegged UST, which minted more LUNA. The death spiral was complete within 72 hours. $40 billion in combined market value evaporated.

The human toll was devastating. Entire life savings were wiped out. In South Korea, where LUNA was enormously popular with retail investors, the collapse led to suicides. Elderly investors who had bet retirement funds on the "stable" coin lost everything. Do Kwon's prior tweets mocking critics became evidence of either willful blindness or fraud.

Do Kwon fled South Korea. Interpol issued a red notice. He was eventually tracked to Montenegro using a fake Costa Rican passport. Arrested in March 2023, he spent over a year in Montenegrin custody while the US and South Korea fought over extradition.

In January 2025, Do Kwon was extradited to the United States. He pleaded guilty to federal fraud charges. Terraform Labs had already settled with the SEC for $4.47 billion. On December 11, 2025, a federal judge sentenced him to 15 years in prison and ordered over $19 million in forfeiture. The man who told his critics they were poor will spend the next 15 years in a cell.