‘The Elizabeth Holmes of crypto’: TerraUSD founder Do Kwan is blamed for market-wide meltdown as it’s revealed he mocked his critics as ‘poor’ and said he found failing companies ‘ENTERTAINING’
Do Kwon, the mastermind behind failing cryptocurrencies TerraUSD and Luna, is drawing scrutiny and criticism after the collapse of his venture triggered a massive meltdown in the broader crypto market this week.
Kwon, 29, is the brash CEO of Terraform Labs, the company behind the two related technologies: stablecoin TerraUSD, which is supposed to trade 1-to-1 with the US dollar, and governance token Luna, which is supposed to ensure the stable exchange rate.
Thanks in part to his big personality and confident pitch, Kwon was able to attract high-profile investors, including the venture capital arm of the major exchange Coinbase.
But after TerraUSD ‘de-pegged’ from the dollar this week, trading as low as 23 cents amid panicked selling, it triggered a broader meltdown that sent the largest cryptocurrency, Bitcoin, to its lowest level since 2020.
Issuer Luna plunged more than 99 percent in value on Thursday, and was trading at far below one cent, down from a high of $120 verlede maand.
Nou, a columnist for industry news site CoinDesk is calling Kwon ‘the Elizabeth Holmes of crypto’ in a stinging comparison to the convicted fraudster who fleeced investors for billions.
Terra co-founder Do Kwon (reg, with Daniel Shin) is being compared to convicted fraudster Elizabeth Holmes after his crypto venture collapsed and triggered a broader market meltdown
TerraUSD is supposed to trade 1-to-1 with the US dollar, but ‘de-pegged’ from the dollar this week, trading as low as 23 cents amid panicked selling
Kwon’s image has also not been helped by his longstanding habit of dismissing his critics as ‘poor’ en, just over a week ago, his gleeful comment in an interview that there is ‘entertainment in watching companies die.’
A spokesperson for Kwon did not immediately respond to a request for comment from DailyMail.com on Thursday afternoon.
In a blistering column on Thursday, CoinDesk writer David Z. Morris compared Kwon to both Holmes and infamous Enron CEO Jeffrey Skilling, who was convicted of felony fraud charges in that company’s collapse.
‘At the very least, he’s doing a great impression of a man who really believes in what he’s selling,’ Morris wrote of Kwon.
‘Despite reams of critical appraisals of the fundamental structure of Luna, Kwon not only stayed the course, but over the last 24 hours has angled to find more capital to flush through the holes in his sinking flagship,’ the columnist added. ‘He’s nowhere near acknowledging that he put the holes there when he built it.’
The meltdown in TerraUSD, one of the world’s largest stablecoins, rippled through cryptocurrency markets on Thursday, pushing another major stablecoin Tether below its dollar peg and sending bitcoin to 16-month lows.
A columnist for industry news site CoinDesk is calling Kwon (hierbo) ‘the Elizabeth Holmes of crypto’ in a stinging comparison to the convicted fraudster
Kwon has a longstanding habit of dismissing his critics as ‘poor’
Stablecoin TerraUSD has been hit by the turmoil and broke its peg to the U.S. dollar, which led to it falling as low as 31 cents on Wednesday. On Thursday it was trading around 47 sente.
Stablecoins are digital tokens pegged to the value of traditional assets, such as the U.S. dollar.
But TerraUSD is an algorithmic, or ‘decentralised’, stablecoin, and was supposed to maintain its dollar peg via a complex mechanism which involved swapping it with another free-floating token.
‘The collapse of the peg in TerraUSD has had some nasty and predictable spillovers. We have seen broad liquidation in BTC, ETH and most ALT coins,’ said Richard Usher, head of OTC trading at BCB Group, referring to other cryptocurrencies.
Even stablecoins backed by traditional assets were showing signs of stress on Thursday.
Tether slipped below its 1:1 dollar peg, hitting as a low of 95 cents around 0724 GMT on Thursday, based on CoinMarketCap data.
‘The lack of transparency provided by Tether on the quality of commercial paper they hold to back the peg made it the obvious next target,’ said BCB Group’s Usher.
‘Egter, Tether is a very different animal to Terra, with a more proven ecosystem and I have far more confidence that when volatility subsides it can regain its peg and stability,’ hy het gesê.
Paolo Ardoino, Tether’s chief technology officer, said in a Twitter Spaces chat that the stablecoin had reduced its exposure to commercial paper over the last six months and now holds the majority of its reserves in U.S. Treasuries.
Ardoino said a quarterly update on Tether’s reserves would be available later in the month.
Tether, is the largest stablecoin by market cap, en, along with USD Coin and Binance USD, they account for almost 87% of the total $169.5 billion stablecoin market, according to CoinMarketCap.
The large number of centralised cryptocurrency exchanges and decentralised venues, each with their own liquidity profile and credit risk, was adding to price distortions across the market, to Denis Vinokourov, head of research at Corinthian Digital Asset Management, gesê.
‘The spillover effects into other stablecoins is in part driven by the fragmented nature of the market,’ Vinokourov said.
‘This credit risk, especially during the times of tight liquidity conditions and mass deleveraging leads to further price distortions.’
Market players are still assessing the impact TerraUSD’s troubles on investors.
In its biannual Financial Stability Report on Tuesday, die VSA. Federal Reserve warned that stablecoins are vulnerable to investor runs because they are backed by assets that can lose value or become illiquid in times of market stress.