Do Kwon: The Man Who Vaporized $40 Billion

In July 2021 Frances Coppola, a British economist, wrote on Twitter that Terra's digital dollar would fail the moment frightened investors all ran for the exit at once. Do Kwon, the 29-year-old who had built it, replied: "I don't debate the poor on Twitter, and sorry I don't have any change on me for her at the moment." His fans loved it. Ten months later she was proved right in about a week.

When Terra collapsed in May 2022, roughly $40 billion of value disappeared. Its two coins, the TerraUSD stablecoin and its sister token LUNA, went from among the ten biggest in crypto to almost nothing. Ordinary savers in South Korea, the United States and across Asia lost deposits they had been told were as safe as cash. The panic spread to lenders and hedge funds and, within six months, helped bring down a chain that ended at FTX. Kwon is now serving a 15-year sentence in the United States for fraud.

The bright young founder

Kwon Do-hyung was born in Seoul in 1991. He studied computer science at Stanford University, worked as an engineer at Apple and Microsoft, and went home to start a networking company called Anyfi. In January 2018 he co-founded Terraform Labs with Daniel Shin, a well-known Korean entrepreneur behind the shopping site Ticket Monster, whose payment app Chai was meant to give Terra real customers.

Kwon was not a quiet engineer. On Twitter, where he posted as @stablekwon, he was combative, funny and contemptuous of critics. He called doubters poor, told them to "stay poor" and treated every warning as a sign that he was winning. Investors gave Terraform hundreds of millions of dollars. A fan base calling itself the "Lunatics" followed him everywhere. In April 2022 LUNA hit a record of about $119 a coin, and Kwon was one of the most famous people in crypto.

The machine he built

Terra's main product was TerraUSD, or UST, a stablecoin: a crypto token meant to be worth exactly one dollar, a digital dollar that can be sent anywhere in seconds. Most stablecoins keep that price by holding real dollars or Treasury bills in a bank, one for one, like a cloakroom ticket backed by a coat on the rail. UST held nothing of the kind. It was an "algorithmic" stablecoin, kept at a dollar by a formula.

The formula worked through LUNA. Anyone could always swap one UST for one dollar's worth of newly printed LUNA, and the reverse. If UST slipped to 98 cents, traders could buy it cheap, swap it for a dollar of LUNA and pocket the difference, which pushed UST back up. The UST they handed in was destroyed. In stock market terms, it was like a company promising that its bonds could always be swapped for a dollar's worth of new shares. That holds only while people believe the shares are worth something. If they stop believing, each swap prints more shares, the price falls further, and more shares have to be printed. Critics called it a death spiral long before it happened.

What brought the money in was Anchor Protocol, a savings service built on Terra that paid close to 20 percent a year on UST deposits, at a time when banks paid almost nothing. It was the reason most people held UST at all. By May 2022 there were about $18 billion of UST in circulation, and most of it sat in Anchor. The interest was not earned by lending; Terraform and its backers kept topping up the reserve that paid it. To reassure holders, the Luna Foundation Guard, a non-profit Kwon controlled, spent about $3 billion buying bitcoin as an emergency fund.

A week in May

On 7 May 2022 large holders began pulling money out of Anchor and selling UST in size. Its price slipped below a dollar. The Luna Foundation Guard sold its bitcoin to buy UST, but the defence ran out within days. Holders rushed to swap UST for LUNA, the formula printed LUNA by the billion, and LUNA's price fell from about $80 to a fraction of a cent by 13 May. The total supply of LUNA went from under 400 million coins to more than 6 trillion.

On 9 May Kwon tweeted "Deploying more capital - steady lads", then went quiet. When he came back it was to propose a new Terra. Holders voted for a restart, and "Terra 2.0" launched on 28 May 2022 with a new coin; the old chain was renamed Terra Classic. Police in Seoul were asked to protect his family's home after a stranger turned up at the door.

The damage did not stay inside Terra. Three Arrows Capital, a Singapore hedge fund that had bet heavily on LUNA, went bust. The crypto lenders Celsius and Voyager, which had lent to it or chased the same yields, froze customers' money within weeks. The chain ended at FTX in November.

It later emerged that the formula had not worked even once before. In May 2021 UST had slipped below a dollar and recovered, and Kwon told the world the algorithm had fixed it. In fact, prosecutors and the SEC said, he had quietly arranged for the trading firm Jump Trading to buy UST and push the price back up, in return for cheap LUNA. That lie was the heart of the fraud he later admitted.

On the run, then in court

Kwon had moved to Singapore before the crash. In September 2022 a Seoul court issued a warrant for his arrest and Interpol published a red notice, a global request to find and detain him. He was already gone, having travelled by way of Dubai to Serbia, according to Seoul prosecutors. In March 2023 police at Podgorica airport in Montenegro arrested him as he tried to board a flight to Dubai with a forged Costa Rican passport. A Montenegrin court jailed him for four months for the passport, then spent more than a year deciding whether to send him to South Korea or the United States.

He was flown to New York on 31 December 2024. The criminal case, from the guilty plea of August 2025 to the 15-year sentence handed down on 11 December 2025, is told in full in the Rap Sheet. The short version: he admitted fraud, Judge Paul Engelmayer gave him three years more than prosecutors asked for, and he was ordered to forfeit about $19 million. Terraform Labs itself had already agreed to pay the SEC $4.47 billion and to shut down.

The man who told critics he did not debate the poor will be in prison well into the 2030s. He may later ask to serve the second half of his term in South Korea, where he also faces charges and where a senior prosecutor has said a conviction could bring more than 30 years.