🎧 Listen: In today’s episode of The Journal podcast, aosipovich explains how Do Kwon, the creator of the failed TerraUSD stablecoin, went from being a major crypto player to facing fraud charges in several countries
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Ryan Knutson: Kwan was wanted on allegations of fraud and financial crimes. Last Thursday, authorities in Montenegro, a small country in Eastern Europe, arrested him at the airport. Ryan Knutson: The Terra Luna system was Kwon's claim to fame. Most cryptocurrencies are volatile. Their prices can swing wildly, which can make them hard to transact with. Kwon's solution was something called a stablecoin. His stablecoin, TerraUSD, was supposed to be, well, stable. One TerraUSD was always supposed to equal one US dollar.
Alexander Osipovich: The idea was to have a stablecoin that didn't have dollars in the bank backing it up, and that way, it could stay outside of government control. Because if a stablecoin has a bank account, banks are regulated. Banks can be supervised by the government. Do Kwon's statements at the time were that he wanted to sort of liberate money.
Ryan Knutson: This looked like good news for TerraUSD. If people were using the currency in their everyday transactions, it would help create demand for the coin and keep up its value. But from the beginning, TerraUSD had its critics. Ryan Knutson: We covered the collapse of Terra Luna on the show back when it happened, and at the time, it was certainly seen as a massive failure, but were there people back then talking about it being a potential fraud?
Ryan Knutson: After a $40 billion blowup, it is kind of surprising to turn around and pitch people on a new and improved version of the same thing. Ryan Knutson: But not completely. Kwon was still tweeting. He even went on a podcast called Unchained and said the charges weren't legitimate and that they were politically motivated.
Ryan Knutson: Photographers captured Kwon being escorted into a Montenegro police station on Friday, wearing a gray sweatshirt and a black ball cap. That same day, US prosecutors in New York also filed criminal charges against him. Ryan Knutson: Chai, that was the Korean payments app that Kwon touted as evidence that TerraUSD was catching on. Kwon said that transactions on Chai were settled using Terra's technology.
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