Do Kwon, a trash-talking entrepreneur from South Korea, referred to the cryptocurrency he created in 2018 as “my biggest invention,” trumpeting the world-changing potential of the forex, Luna, in numerous tweets and interviews, rallying a band of traders and supporters he proudly referred to as “Lunatics.”
Mr. Kwon’s company, Terraform Labs, gathered more than $200 million from investors such as Lightspeed Enterprise Partners and Galaxy Digital to support crypto projects built using the currency, even as sceptics questioned its technological foundations. Luna’s total worth soared to more than $40 billion, igniting a frenzy of delight among day traders, start-up entrepreneurs, and wealthy investors.
“I don’t argue the poor,” Mr. Kwon said, dismissing the topic.
However, Luna, as well as another FX established by Mr. Kwon, TerraUSD, saw a stunning collapse last week. Their failures had a domino effect on the rest of the cryptocurrency market, lowering Bitcoin’s value and hastening the loss of $300 billion in the crypto financial system. The value of Luna stayed at zero this week, while TerraUSD continued to fall.
The demise of Luna and TerraUSD serves as a case study in cryptocurrency hype and who is left holding the bag when it all comes tumbling down. Mr. Kwon’s development was aided by well-known financiers willing to back highly speculative financial instruments. While some of these dealers profited handsomely from early purchases of Luna and TerraUSD currencies, retail shops are now facing terrible losses.
After selling nearly 80% of its interests in Luna during the previous year, Pantera Capital, a hedge fund that invested in Mr. Kwon’s efforts, realised a profit of almost 100 times its initial investment, according to Paul Veradittakit, an investor in the firm.
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