Silke Mayr Collapse of Terraform’s Coins Sparked Market Chaos
Do Kwon, the former CEO of Terraform Labs, has been extradited to the United States. US authorities accuse him of causing the collapse of two cryptocurrencies, TerraUSD and Luna, in 2022. This collapse triggered a massive crypto market sell-off, erasing $40bn (£31.8bn) in investor funds.
Prosecutors claim Kwon orchestrated a multi-billion-dollar crypto asset securities fraud. Terraform’s downfall devastated the market, wiping out over 99% of its value in just 48 hours. Fearing further losses, investors rushed to withdraw from other cryptocurrencies, compounding the damage. The broader market reportedly lost $400bn (£318bn) during the crash.
Fans of Luna, who called themselves “Lunatics,” once celebrated Kwon as their leader. However, the collapse of Terraform Labs marked a stark fall from grace.
Legal Battle Ends With Extradition
After the crash, Kwon fled South Korea, where a warrant for his arrest had been issued. He was arrested in Montenegro in March 2023 while attempting to board a flight to Dubai. A Montenegrin court found him guilty of forging documents, prolonging his legal troubles.
Despite Montenegro lacking extradition treaties with the US or South Korea, both countries sought his extradition. In December, Montenegro’s Ministry of Justice approved Kwon’s transfer to the US. Reports suggest Kwon agreed to the extradition.
Terraform Labs filed for bankruptcy in January 2024, months after the market chaos. Bitcoin and other assets have since recovered significantly, with Bitcoin surpassing $100,000 per coin briefly in December 2024.
Kwon’s extradition concludes an 18-month legal saga, bringing him to face US justice over one of the largest crypto scandals in history.