Terra LUNA Tokens Fall Steeply on Do Kwon’s arrest

[TL; DR]

Do Kwon, the founder of Terra Blockchain, was arrested in Montenegro since he had a warrant of arrest for his crypto fraud scheme involving Terra LUNA.

The prices of LUNA tokens fell by 8% following the news of Do Kwon’s arrest.

It is not clear, at the moment, whether Montenegro will deport Mr Kwon to South Korea or the United States.

Introduction

The effects of certain events in the crypto sphere may stay long. For example, close to a year after the collapse of Terra USD (UST) and LUNA the crypto market still experiences the ripple effects. The recent arrest of Do Kwon, the founder of Terra, led to the fall in the price of the LUNA tokens. This article explores the market’ reactions to the arrest of Do Kwon and the possible legal actions the United States will take on him.

The price of LUNA tokens fell upon the arrest of Do Kwon
The native tokens of Terra blockchain, LUNA, fell by 8% following the arrest of Do Kwon, its founder. The recent report says that Kwon was arrested in Montenegro, at Podgorica airport. The International Crime agency, Interpol confirmed the arrest of Kwon together as well as Han Chang Joon, Terraform’s chief financial officer. Kwon’s identity was confirmed using his finger prints.

Kwon was on the run following the collapse of his $40 billion stablecoin coin, Terra USD (UST), and its sister coin, LUNA, in May 2022. Filip Adzic, Montenegro’s Internal Affairs Minister confirmed the arrest of Kwon on both Twitter and Facebook.

Read also: Do Kwon Reaches 5-star Wanted level as SEC Brings More Fraud Charges

Mr Adzic added, “Montenegrin police have detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, co-founder and CEO of Singapore-based Terraform Labs.”

The arrest of Kwon follows a warrant of arrest which Seoul court issued in September 2022 for his breach of South Korea’s capital markets law and Interpol’s subsequent red notice. Currently, it is not clear where Montegro will send Mr Kwon because South Korea, his country, and the United States want him to answer litigation charges.

A few hours after his arrest, the Federal prosecutors in New York charged Kwon for fraud involving Terra crash. In fact, Mr Kwon faces eight charges which include commodities fraud, securities fraud, wire fraud, conspiracy to defraud and engaging in market manipulation.

History of Terra coins

Mr Kwon, aged 31 and a graduate of Stanford University, founded the Terra blockchain which issued LUNA and the stablecoin, Terra USD (UST), pegged 1.1 with the United States dollar. However, these two coins were connected as LUNA helped to maintain the value of UST.
One sad thing is that Mr Kwon did not heed the concerns of some analysts who pointed out some shortfalls of his Terra crypto. However, in May 2022 the value of LUNA dropped significantly, setting off the so-called death-spiral which led to the Terra crash. The LUNA collapse resulted in the loss of over tens of billions of dollars and even affected the value of other unrelated cryptocurrencies such as Bitcoin and ETH.

Market reaction to the collapse of Terra LUNA

The crypto market responded swiftly to the news of Do Kwon’s arrest, with the price of LUNA decreasing by 10 cents from $1.40. According to CoinGecko, the value of the LUNA Classic fell by 3.7%. However, the rest of the major cryptocurrencies were not affected in any way traceable to the Terra crash. At the time of writing, it is still safe to buy luna.

How to avoid crypto scams - Tips from Gate.io

The crypto market has learnt much from the collapse of Terra LUNA in 2022. In general, we have learnt the need to do thorough research and other ways to identify scams.

Research thorough: The greatest lesson that we learnt from the collapse of Terra is that one should carry out thorough research on a cryptocurrency he/she wants to invest in. The users should read the whitepaper, especially its road map, tokenomics and the team. In addition, one should find out the sentiment of the market towards that cryptocurrency.

Read also: Top Crypto Scams to Avoid

Ignore social media hype: The hype that occurs on social media platforms such as Twitter and Facebook may mislead you. In some cases, project teams pay influencers and celebrities to spread information which may not be accurate. The key thing is to get advice from people you personally know who have much knowledge and experience of what is taking place in the crypto sector.

Vet the online websites: Some bad actors create websites or applications that look identical to the legitimate ones. However, if you study them carefully, you will observe some minor differences especially in the domain names. If you enter your personal information in them you may lose your cryptocurrencies. For example, scams may request for your private keys to certain wallets like MetaMask.

Reject free offers: In some cases, scammers promote crypto projects where they promise free offers. It is important to avoid offers that require you to pay a small amount in cryptocurrency. In addition, always check reviews about websites, applications and crypto products before using them.

Read also: How Not to Fall For NFT Scams

Other tips: There are other tips that are prent which you should use. For example, you should use multi-factor authentication, firewalls and VPN, among others. It is also important to avoid sharing your private keys and seed phrases. Lastly, consider using different crypto wallets to manage your digital assets.

Conclusion

In short, Do Kwon, the founder of Terra blockchain was arrested in Montenegro recently. The United States and South Korea wants him to answer charges levelled against him of running a crypto using various scam techniques. Notably, the prices of Terra Luna’s tokens fell sharply when the news of Kwon’s arrest reached the market.