In May, the price stability of Terra LUNA and UST triggered a collapse in the entire market. Terra sold a large amount of Bitcoin to support the UST price. During the first 18 hours of the collapse, Terra founder Do Kwon was silent. Even if he announced his recovery plans with Terra 2.0 on his return, it wasn’t enough for recovery. Now its founder is in trouble with governments.
LUNA founder Do Kwon sued in US
Do Kwon is under legal surveillance after Terra’s failure. A U.S. federal judge ordered Kwon to comply with an earlier SEC subpoena, which he tried to avoid. The SEC began investigating Mirror Protocol, a Terraform Labs project, last year. The LUNA founder sent Kwon a subpoena at a New York conference on September 20, 2021.
Now, a district court has ruled that it complies with the SEC’s rules and that the agency has adequate jurisdiction. The US Court of Appeals for the 2nd Circuit upheld that decision on Wednesday. Terraform Labs (TFL) and Kwon’s appeal denied. Details of the process of the case will emerge in the coming days.
Surprising prediction from Do Kwon
Alongside the court ruling, Do Kwon made a sarcastic collapsed comment today. At the time of the tweet, Bitcoin was fluctuating below $20,000. The LUNA founder says investors should learn a final lesson, as someone who sells large amounts of Bitcoin to support the UST price:
Build stronger and more resilient systems against these attacks. Be the change you want to see. There were very important lessons to be learned in the past for cryptocurrencies.
Do Kwon also had something to say about the DeFi market. Talking about the scars of technology, the LUNA founder says people should have faith despite the collapses:
DeFi protests against state-sponsored violence against financial sovereignty. Volatility is the price believers pay to achieve this sovereignty. The purges should not invalidate these beliefs.
A brief history of failed algorithmic stablecoins
After Terra UST, a number of stablecoins, including USDT, experienced similar problems. A common view is that stablecoins are not subject to volatility, making them a safer investment. But Terra isn’t the first stablecoin to crash. Previously, Basis Cash (BAC), a stablecoin that Do Kwon was behind, also crashed.
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