Key Metrics
21.01
Heat Index-
Impact LevelMedium
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Scope LevelGlobal
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Last Update2025-08-13
Key Impacts
Positive Impacts (1)
Negative Impacts (7)
Event Overview
The collapse of the TerraUSD stablecoin and Luna cryptocurrencies, orchestrated by its founder's admitted fraudulent practices, highlights systemic vulnerabilities in algorithmic finance and intensifies global regulatory scrutiny over unbacked digital assets. This event underscores the risks of decentralized financial systems lacking transparency and accountability, triggering cascading failures across international crypto markets.
Collect Records
TerraUSD Founder Do Kwon Pleads Guilty to Fraud in Connection with 2022 Market Crash
Do Kwon, the founder of Terraform Labs and creator of the TerraUSD and Luna cryptocurrencies, has pleaded guilty to fraud charges. Kwon, sometimes referred to as the 'cryptocrash king' and ‘the cryptocurrency king,’ was a central figure in the collapse of the TerraUSD stablecoin in 2022, which erased approximately $40 billion in value from the cryptocurrency market.
TerraUSD, promoted as a stablecoin pegged to the US dollar, lost its peg in May 2022, causing massive losses to investors and triggering a major downturn in global crypto markets. The fallout led to widespread financial damage among individual investors and institutions that had invested heavily in Terraform’s ecosystem.
According to the charges, Kwon misled investors about the stability of TerraUSD and made false statements regarding its backing and algorithmic stability mechanism. US prosecutors allege that Kwon intentionally deceived stakeholders while promoting and marketing the cryptocurrency projects.
His guilty plea comes as part of legal proceedings in the United States, where authorities have pursued multiple charges related to wire fraud, securities fraud, and commodities fraud. The case is linked directly to the collapse of Terraform Labs’ digital assets, which were widely traded before the crash.
Further details on sentencing were not provided at this stage. The plea marks a significant development in one of the largest fraud cases in cryptocurrency history.