Written by: Sleepy
On August 12, 2025, in a federal court in Manhattan, New York, a slowly rising Do Kwon in a yellow prison uniform.
Years of evasion and prison life had made his once-plump cheeks thin, and his hairstyle had transformed into the standard crew cut of prisoners. Those eyes that once sparkled in front of the camera now only revealed fatigue.
This 33-year-old Korean man, once the darling of the crypto world, is now the main character in the largest financial fraud case in history.
In a courtroom sketch, Do Kwon bowed his head, hands tightly clasped. He pleaded guilty, stating: 'In 2021, I made false and misleading statements regarding the reasons for TerraUSD's re-peg. What I did was wrong, and I want to apologize for my actions.'
Now, he faces long years of imprisonment and hefty fines, but for the hundreds of thousands of investors who lost $40 billion because of him, this is far from enough.
Time is the most ruthless judge; it not only changed Do Kwon's appearance but utterly destroyed everything he once had.
Prosecutor Damian Williams stated outside of court that this plea was an 'important milestone in the enforcement of cryptocurrency fraud cases.' However, the term 'milestone' sounds too cold; it cannot reconstruct broken families, comfort seniors who have lost everything, nor can it save the young people who chose to end their lives.
From elite schools in Seoul to Stanford, from skyscrapers in Singapore to dilapidated prisons in Montenegro, Do Kwon's life trajectory resembles a parabolic curve, rapidly rising and then plummeting, ultimately shattering.
The birth of a genius
From Seoul to Silicon Valley
On September 6, 1991, Do Hyeong Kwon let out his first cry in a hospital in Seoul, and no one anticipated that this infant would become one of the most controversial figures in global financial history 30 years later.
He was born into a typical Korean middle-class family, with a father who was an engineer and a mother who was a teacher, a combination that represented a reverence for knowledge and a desire for success in Korean society. South Korea is a nation deeply troubled by educational anxiety, where children are caught up in competition from kindergarten. Do Kwon exhibited intelligence beyond his peers from a young age, with a particular talent for mathematics, as if numbers would automatically arrange themselves into the most elegant answers before him.
He attended Daewon Foreign Language High School in Seoul, one of the most elite schools in Korea. It gathered the smartest students from across the country who would spend the most crucial three years of their lives in this ivory tower. According to classmates' memories, Do Kwon was always the first to finish his homework and the one who loved to challenge the teacher's viewpoints. His intelligence was evident, but what was even more apparent was his confidence. This confidence may have seemed endearing in the adolescent school environment, but it also sowed the seeds for future tragedy.
At that age, he already believed he was different, convinced he was destined for great things. High school Do Kwon was like a star accumulating energy, waiting to burst forth with dazzling brilliance on a bigger stage. That stage was Stanford across the ocean.
In 2010, 19-year-old Do Kwon boarded a flight to the United States. For a young Korean, getting into Stanford University meant a complete change in life. Stanford, located in the heart of Silicon Valley, is the birthplace of countless tech legends.
The computer courses were not difficult for Do Kwon; what truly fascinated him was the entrepreneurial atmosphere permeating the place. Every student here dreamed of becoming the next Steve Jobs or Mark Zuckerberg, and every idea could potentially become the next world-changing product. Silicon Valley has a unique magic that makes people believe technology can solve all problems, allowing young people to believe they can revolutionize the world. Do Kwon was deeply influenced by this culture.
At that time, Bitcoin had only recently been born, and the keen Do Kwon began to deeply study blockchain technology, reading Satoshi Nakamoto's white paper and participating in related project developments. While his classmates were anxiously searching for jobs, Do Kwon was already contemplating how to redefine money itself through technology. In his view, the traditional financial system was outdated and inefficient, while blockchain technology represented the future.
His time at Stanford shaped Do Kwon's worldview. Here, he learned to think in the language of technology, to view the world through the eyes of an entrepreneur. More importantly, he established a belief here: he was here to change the world.
In 2015, Do Kwon graduated from Stanford University, no longer the naive boy from Seoul. He transformed into a confident young man, a dreamer who believed he could create miracles. His resume bore a Bachelor’s degree in Computer Science from Stanford, and his heart burned with the ambition to change the world.
The path of entrepreneurship
Returning to Korea, Do Kwon had to make a choice: to join a large company like Samsung for a stable and decent life like most of his classmates or to take the risky path of entrepreneurship. For a young man who had been immersed in entrepreneurial culture at Stanford, the answer was obvious.
In 2016, at the age of 25, Do Kwon founded Anyfi, marking his first entrepreneurial attempt. He hoped to allow users to share their WiFi networks and earn token rewards through blockchain technology. In his view, traditional telecom operators were monopolists, and Anyfi could break this monopoly through technology, allowing ordinary people to benefit from network infrastructure.
The project gained some attention and investment early on. Do Kwon began to appear frequently at tech events in Korea, introducing his project and ideas. His speeches were passionate, and the vision sounded exciting. Under the flashing lights, Do Kwon enjoyed the aura of a startup star. But reality soon delivered a harsh blow. The Anyfi project faced numerous challenges, and the infrastructure at that time was far from mature enough to support such complex applications. The gap between technical ideals and business reality was much larger than Do Kwon had imagined.
By the end of 2017, Anyfi declared failure. For any entrepreneur, this would be an incredibly painful experience; failure is bitter and can lead one to question their abilities and reflect on their decisions. But Do Kwon did not think this way. He believed that Anyfi failed because the timing was wrong, that the market was not ready to accept such an advanced concept, and that investors lacked the foresight to support such a project.
This cognitive bias is referred to as 'self-serving bias' in psychology, where people tend to attribute success to internal factors (like their own abilities) and failures to external factors (like bad luck).
For Do Kwon, 'self-serving bias' not only failed to teach him lessons from failure but instead bolstered his confidence. He began to focus on the emerging field of decentralized finance, particularly stablecoins. In his view, this was an opportunity to 'redefine money itself,' a chance to secure a place in history.
In January 2018, a new company arrived in Singapore—Terraform Labs.
The company's co-founders are Do Kwon and Daniel Shin, two young graduates from top universities, both passionate about blockchain technology and believing they could change the world.
Choosing Singapore as the headquarters was a shrewd decision. This city-state is not only a financial center of Asia, with a sound financial infrastructure and an international talent pool, but more importantly, it has a relatively open regulatory attitude towards blockchain technology. Singapore encourages innovation and simplifies regulation, providing an ideal growth environment for startups like Terraform Labs.
Their core idea sounded simple: to create an algorithmic stablecoin system that combined the decentralization of Bitcoin with the stability of the dollar. This system consisted of two tokens: TerraUSD (UST), a stablecoin targeting a 1:1 exchange rate with the dollar; and Luna, a governance token used to maintain system stability.
The relationship between the two is like a seesaw: when the price of UST is above $1, the system mints more UST and destroys Luna, increasing the supply of UST and pushing down its price; when the price of UST is below $1, the system destroys UST and mints Luna, reducing the supply of UST and pushing up its price.
This mechanism does not require bank deposits or government bonds as reserves, relying entirely on the market and algorithms to maintain stability.
Do Kwon likened this system to a 'gravitational system of the digital world,' claiming it was a revolution in the history of currency. In his view, traditional stablecoins were like balloons tethered with ropes, while UST was like a planet with its own gravity, able to maintain a stable orbit naturally.
Do Kwon demonstrated exceptional persuasive abilities during the fundraising process. He could explain complex technical concepts in clear and concise language and paint a grand and enticing vision. More importantly, he could make investors believe that he was the one who could realize this vision. In August 2018, Terraform Labs completed a $32 million seed round of financing, with investors including well-known institutions like Binance Labs, Polychain Capital, and Coinbase Ventures. These investments not only provided financial support but also lent authoritative backing to the project.
In April 2019, the Terra blockchain officially went live. This day held special significance for Do Kwon, marking his transformation from a failed entrepreneur into a leader poised to change the world.
At the same time, Terraform Labs began building the ecosystem around Terra. They launched the Terra Station wallet, allowing users to conveniently store and transfer Terra tokens. They partnered with e-commerce platforms in Korea to enable users to shop using Terra tokens. They also started developing various decentralized applications to increase the demand for UST.
By the end of 2020, the Terra ecosystem had begun to take shape. The market capitalization of UST reached hundreds of millions, and the price of Luna was steadily rising. More importantly, an increasing number of users began to use various services of Terra. In the cryptocurrency community, Do Kwon was hailed as a pioneer of algorithmic stablecoins, and the Terra project was seen as one of the most promising projects in the DeFi space.
In such an environment, Do Kwon and his Terra empire continued to expand rapidly, heading towards greater success and a deeper abyss.
Tall buildings rise from the ground
Gold and jade versus rotten silk
The year 2021 was a turning point in Do Kwon's fate.
That year, he launched the Anchor Protocol, a lending protocol promising a 20% annual yield on UST deposits. Such a yield would be unimaginable in the traditional financial world, where even the most aggressive hedge funds struggle to sustain such high returns.
In Do Kwon's vision, the Anchor Protocol was the core engine of the Terra ecosystem. The high yields would attract massive funds, increase demand for UST, push up the price of Luna, and create a positive feedback loop.
However, this logic has a fatal flaw.
A 20% yield requires real economic activity to support it; to maintain this promise, the Anchor Protocol needed about $6 million in subsidies daily. These subsidies primarily came from the Luna Foundation Guard (LFG), a foundation controlled by Terraform Labs.
In other words, the high yield of the Anchor Protocol was essentially a Ponzi scheme, using new investors' money to pay returns to old investors. But Do Kwon never described it this way. In his speeches, the Anchor Protocol was the 'future of decentralized finance,' the 'terminator of traditional banking.'
By early 2022, the TVL of the Anchor Protocol surpassed $14 billion, becoming one of the largest DeFi protocols at the time. Investors from around the world flocked to invest their funds. The enthusiasm and trust of these investors intoxicated Do Kwon. He began to believe he had truly created a miracle and had found the Holy Grail of the financial world.
Meanwhile, Do Kwon also launched the Mirror Protocol, a synthetic asset platform. In public promotions, this platform was described as 'completely decentralized,' with no individual or entity able to unilaterally control the protocol. However, this was not the case; as later investigated by the SEC, Do Kwon actually maintained secret control over the Mirror Protocol. He could unilaterally modify protocol parameters, decide which synthetic assets to add or remove, and even pause the entire protocol's operation.
More serious fraud involved Chai. Starting in 2019, Do Kwon claimed on various occasions that Chai used the Terra chain to process transactions, with transaction volumes reaching 'billions of dollars.' This claim was written into the Pitch Deck, used for media interviews, and presented as crucial evidence of Terra's practical applications. Investors could indeed be persuaded by these figures, as most blockchain projects were merely concepts, while Terra seemed to have real use cases.
According to the SEC's investigation, this was also false.
The transactions on the Chai platform were actually processed through traditional financial networks, unrelated to the Terra chain. Do Kwon and the executives at Terraform Labs were fully aware of this fact but continued to make misleading statements to investors. This was deliberate fraud, but in Do Kwon's view, as long as he could attract more investment and boost token prices, some 'details' could be overlooked.
Arrogance and prejudice
Success had made Do Kwon extremely arrogant.
In July 2021, when British economist Frances Coppola criticized the design flaws of algorithmic stablecoins on Twitter, Do Kwon responded, 'I do not debate with the poor, sorry I do not have any change to spare her right now.'
This statement is an insult to a scholar and a declaration of war against all skeptics. In his view, wealth equated to correctness; those who criticized him were not being rational but were simply 'poor.' Such remarks caused an uproar on social media. Supporters cheered for Do Kwon, viewing it as a powerful rebuttal to traditional scholars, while critics believed it exposed his true nature—a nouveau riche intoxicated by success.
There are many similar controversial remarks. When someone questioned the sustainability of Terra, Do Kwon would say, 'They're all now poor.' When someone voiced concerns about the risks of algorithmic stablecoins, he mocked, 'Have fun staying poor.'
Driven by this mentality, Do Kwon became increasingly isolated. Few around him dared to voice dissent, and even when someone did raise doubts, he would counter with his wealth and success. This environment further reinforced his arrogance and distanced him from reality.
On April 17, 2022, Do Kwon announced the birth of his daughter on Twitter, writing: 'Baby Luna, my dearest creation, named after my greatest invention.'
This statement sparked further controversy. Supporters argued it reflected his confidence in the project, while critics believed it showed extreme narcissism. A father naming his daughter after his business project is unusual, but what was even more unusual was his description of the project as 'my greatest invention.'
In Do Kwon's view, Terra was not just a business project but a manifestation of his personal genius, a legacy he would leave to the world.
In April 2022, the Terra ecosystem reached an unprecedented height. The market capitalization of UST exceeded $18 billion, Luna's market capitalization surpassed $40 billion, and the total value of the entire ecosystem approached $60 billion.
Do Kwon became a superstar in the crypto world. Major media outlets rushed to report his story, various conferences invited him to give keynote speeches, and investors from all walks of life sought to collaborate with him. In these settings, Do Kwon always wore a well-tailored suit, an expensive watch, and a confident smile on his face.
Behind the surface prosperity, risks continued to accumulate.
Some keen observers have begun to notice the problems. Anonymous researcher FatMan published a series of analyses on Twitter pointing out the unsustainability of the Anchor Protocol. Economist Nouriel Roubini warned that algorithmic stablecoins have fundamental flaws. Even some opinion leaders in the cryptocurrency community began to question Terra's long-term prospects.
Do Kwon dismissed these criticisms. To him, they were merely the jealousy of losers. This blind confidence would soon exact a heavy toll on him.
In May 2022, the spring sunshine in Singapore was bright, and the Terra office was bustling. Employees were preparing for an upcoming product launch, and investors were continuously pouring in money. No one realized that an unprecedented financial tsunami was about to arrive.
Do Kwon leaned back on the office sofa, envisioning himself as a hero changing the world, believing that history would remember him.
History will indeed remember him, but not as a hero.
