South Korea: the “master” of cryptocurrency in the sights of justice and investors

A trading floor in Seoul.

(Drawing).

AFP - JUNG YEON-JE

Text by: Nicolas Rocca Follow

3 mins

In Seoul, the wound linked to the collapse of the Luna is still open.

This cryptocurrency, whose value fell by 99% in less than 48 hours at the beginning of May, led to the loss of nearly $38 billion for hundreds of thousands of South Koreans.

A financial fiasco that has a face that of Do Kwon.

He is now in the sights of South Korean justice and is the target of the hatred and anger of many disappointed investors.

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From our correspondent in Seoul,

Kwon Do-hyeong, 30, better known as Do Kwon on the internet, is the creator of Terraform Labs, the platform that created the Luna cryptocurrency.

Educated at the prestigious Stanford University, perfectly English-speaking and presented as someone very charismatic, he was even called a “crypto guru” or a “cult leader” by some people in the financial world.

The least we can say is that his personality is divisive, some still consider him a genius, and others as a crook at the head of a

.

Very present on social networks, he had a fairly offensive strategy, in particular to highlight his company and his system supposed to put an end to the main defect of cryptocurrencies, their volatility.

$60 billion in losses

The system itself was already known, it is that of the "stable-coin", or stable cryptocurrency in French.

The name is clear, the idea is to stabilize the price of the virtual currency and therefore for this, its value is backed by that of the dollar for example, or of another product traded on the stock exchange.

Do Kwon had set up an algorithm supposed to allow investors to place their money in a safe way.

The system used two cryptocurrencies, the UST valued at one dollar and the Luna, the two currencies being linked by an algorithm.

But of course not everything went as planned.

Luna's value has fallen from $116 at the end of April to less than a penny.

The causes ?

There were many risks inherent in the system according to the experts, including the fact that one could withdraw his investment immediately or that the value increased very quickly.

Many people were attracted by the stable return of 20% promised by the company.

But, on May 9, the UST, supposed to have its guaranteed value at one dollar, gradually drops and sales accumulate, the system gets carried away to finally see the cryptocurrency drop out completely.

Within 24 hours, the Luna had already lost 98% of its value.

Today, the total loss is estimated at $60 billion.

Fraud investigation

Do Kwon is now the target of investors who have seen their savings disappear.

One of them, having lost more than $2.4 million, even went to his home in Seoul to hear the explanations of the crypto guru, before being arrested by the police.

An investigation was opened in South Korea against him while five Korean investors filed a complaint.

The company is accused of fraud and of having attracted investors without warning them of the risks that this represented.

The survey is already shaping up to be controversial here in South Korea, where nearly 280,000 people have seen their investments soar.

Despite the scandals Do Kwon continues to display his confidence on social networks.

Moreover, his company launched this weekend a new version of its system by issuing new Luna tokens.

The story therefore does not end there for the one who continues

as the master of stable cryptocurrency.

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• Cryptocurrencies

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