Close to US$40,000 million evaporated from one day to the next with the collapse of the moon and terra on May 13. These are two cryptocurrencies created less than five years ago by a South Korean computer scientist.
Do Kwon is the name of this character, who after the crash apologized to all those who invested in his electronic currencies.
“I am heartbroken by the pain my invention has caused everyone,” the man wrote on Twitter.
That message of condolences did not mean much to a sector of investors because, according to international agencies, one of them sneaked into his apartment and intimidated his wife.
The suspect, whose name has not been released, was arrested by police in South Korea and, hours after his release, indicated that he had lost nearly $2.4 million in a very short time.
The stories behind this are so many that suicide prevention hotlines were even shared on social networks.
From hero to villain
Do Kwon was born in Seoul, the South Korean capital, in 1991, and studied computer science at Stanford University, USA, where he worked for technology giants such as Apple and Microsoft.
Some international media review him as one of those entrepreneurs who come to Silicon Valley, California, with the idea of launching a revolutionary business.
But he only became known worldwide in 2018, the year in which he founded the Terraforms Lab, a laboratory focused on developing various computer programs.
At the time, Kwon said he was working on a “modern financial system” that users could use without having to go to banks or any other type of intermediary.
Thus began his career in the world of cryptocurrencies, an area in which he managed to attract the attention of large investors in venture capital.
Forbes magazine even included him among the most successful young professionals in the world. In 2018 he launched Luna, a cryptocurrency that, unlike bitcoin, did have an inventor with a visible face.
Two years later, he gave life to terra, which was part of a segment called stable cryptocurrencies, since it was linked to safer assets, such as the dollar.
The moon-terra duo had its own mathematical formula, so the value of one depended on the other and they were known as the “twins”.
Kwon had gained credibility in the cryptocurrency market, and investors who put capital into his projects became known as “lunatics,” alluding to the coin developed by the South Korean.
The decadence
2022 has been a particularly difficult year for cryptocurrencies. Bitcoin, the first to be launched on the market and the most valuable, has lost more than 50% of its value since November last year, when it reached US$69,044, its historical value. It is currently trading at around US$30,000.
Luna and Terra were no strangers to this bearish atmosphere and received a withering blow when it began to be speculated that they operated as a Ponzi scheme, that is, as a pyramid scheme. From there began to spread the rumor that pointed to the fact that at any moment they could collapse.
As a result, luna lost all its value (it plummeted from $118 to $0.09). For her part, terra collapsed next to her sister. And the blockchain system that underpinned the operation has since ground to a halt.
Alexánder Ríos, an analyst at the firm Inverxia, explained that cryptocurrencies should be understood as an “exotic asset” within a complete portfolio.
“You can’t put all your eggs in one basket. If you have $10 million you shouldn’t put it all in crypto assets. That would be a mistake because you are risking everything in a single instrument”, stressed the expert
definitely
Do Kwon was the creator of Luna and Terra, two cryptocurrencies that lost all their value in the market and, according to international portals, caused losses of US$40 billion.