On August 12, 2025, in a federal court in Manhattan, New York, 33-year-old Do Kwon, dressed in a yellow prison uniform, bowed his head and pleaded guilty. This South Korean, once hailed as a 'genius' in the crypto world, finally brought an end to the global financial collapse that happened 1,194 days ago—$40 billion vanished, hundreds of thousands of investors woke up from their dreams of wealth, some exhausted their retirement savings, others incurred massive debts, and some even ended their lives as a result. He will spend many long years in prison.
In 1991, Do Kwon was born into a middle-class family in Seoul, with a father who was an engineer and a mother who was a teacher. Amidst the fierce educational competition in South Korea, he showed extraordinary mathematical talent from a young age, gaining admission to the prestigious Daewon Foreign Language High School. Classmates remembered that he could always solve problems first and loved to challenge teachers, his eyes holding the confidence of 'I am destined to be different.' This brilliance became even sharper when he went to Stanford at the age of 19.
The air in Silicon Valley was filled with the restlessness of 'disrupting the world.' Shortly after the Bitcoin white paper was released, Do Kwon dove into blockchain research. He immersed himself in the lab dissecting technical logic, debated 'the future of money' at startup salons, and his four years at Stanford not only earned him a computer science degree but also planted a seed in his heart: 'I want to reconstruct finance with technology.' Upon graduating in 2015, he rejected Samsung's offer, citing that 'big companies cannot accommodate the ambition to change the world.'
The failure of his first startup, Anyfi, did not dull his edge. In 2016, this project aimed at letting users share WiFi for tokens faltered due to immature infrastructure. However, Do Kwon attributed the failure to 'the market not being ready' and turned his focus to the stablecoin sector. He keenly noticed that at the time, stablecoins either relied on centralized reserves (like USDT) or were highly volatile, and 'algorithmic stability' might be the breakthrough point.
In 2018, he and Daniel Shin founded Terraform Labs in Singapore, launching a dual-token system with UST (stablecoin) and Luna (governance token): when UST's price is above $1, Luna is burned to issue more UST; when below $1, UST is burned to issue more Luna, maintaining the peg through algorithms. During his fundraising roadshow, he waved his arms: 'This is not just a simple stablecoin; it is the gravitational law of the digital world!' This vision impressed giants like Binance and Coinbase, leading to $32 million in seed funding, and by the time the Terra mainnet launched in 2019, the ecosystem had already built a wallet, e-commerce payments, and other early forms.
The real explosion came in 2021. Anchor Protocol emerged, promising a 20% annual yield on UST deposits—this number, far exceeding traditional finance, attracted global capital like a magnet. In just six months, Anchor's locked value surpassed $14 billion, with retirees transferring their pensions, young people borrowing to enter the market, and even some institutions listing it as a 'low-risk asset.' Yet, few noticed that this 20% yield relied on the Luna Foundation subsidizing $6 million a day, essentially using new money to pay old debts. During the same period, Do Kwon also claimed that his Chai platform 'processed billions of dollars in transactions on the Terra chain,' but the SEC later found that these transactions all went through traditional networks and were purely fabricated data.
Success inflated his arrogance to the peak. When British economist Frances Coppola questioned the algorithm's flaws, he retorted on Twitter: 'I don’t debate with the poor; I have no spare change to give.' In the face of warnings that 'UST would decouple,' he shrugged off with 'Have fun staying poor,' and team members gradually dared not voice opposing opinions. In April 2022, he named his newborn daughter 'Baby Luna,' writing on social media: 'Named after my greatest invention.' At that time, Terra's ecosystem market value approached $60 billion; he attended summits in a custom suit, his Patek Philippe on his wrist resonating with the enthusiastic applause from the audience, and he appeared to be the king of the crypto world.
The collapse came suddenly. In May 2022, market panic triggered massive redemptions of UST, the algorithmic mechanism malfunctioned, and the price of UST fell below $0.90, triggering a bank run. Luna plummeted from $80 to $0.0001, becoming a 'zero currency.' Do Kwon attempted to inject a large amount of money to stabilize it, but could not stop the avalanche—Anchor collapsed, ecological projects collectively paralyzed, and $40 billion in market value evaporated. He fled Singapore overnight and was arrested in Montenegro for forging a passport; after being extradited to the U.S., he finally bowed his head and pleaded guilty in the face of a mountain of evidence.
Outside the courtroom, the prosecutor called it a 'milestone in the enforcement of crypto fraud,' but for those investors who lost everything, the milestone felt too cold. Do Kwon's life parabola—from a top student in Seoul to a dreamer at Stanford, from a crypto star to a prisoner—ultimately proved that ambition without foundation, no matter how brilliant, is merely a bubble.
