Ponzi charges against Do Kwon, arrest of disgruntled investor, and calls for audit of Tether

One hapless investor lost about 3 billion won ($2.4 million) in the LUNA and UST implosion earlier this month. A Korean social media personality going by the name of “Chancers” took it upon himself to knock on the door to Kwon’s condo in Seoul after Do Kwon allegedly went incommunicado subsequent to the meltdown in the LUNA crypto and UST stablecoin. Unfortunately, Chancers was unaware of the law prohibiting such an action and was arrested by the authorities. (Bitcoin.com)

Crypto wealth destruction

“I wanted to ask him about his plans for LUNA,” Chancers said. “I suffered a huge loss and wanted to talk to him directly.”

“I felt like I was going to die. I lost a lot of money in a short period of time. Around $2.4m of my cryptocurrency was wiped out,” he said to BBC News.

Chancers’ call on Kwon’s property will likely result in a fine and a criminal record.

Crypto exchanges to be interrogated

According to The Daily Hodl, South Korea’s ruling party will hold an emergency meeting with representatives from Upbit, Bithumb, Coinone, Korbit and Gopax, the country’s five largest crypto exchanges.

Yoon Chang-Hyeon, a member of South Korea’s ruling party and chairman of the parliament’s special virtual assets committee, said the investor protection measures instituted by the exchanges would be checked.

Separately, The Daily Hodl also reported that South Korean authorities are considering bringing Ponzi scheme charges against Do Kwon.

The thrust of the investigation will likely be the eye-popping return of 20% offered by the Anchor Protocol, a decentralized finance (DeFi) platform built on top of the Terra ecosystem’s blockchain. A member of the Financial and Securities Crime Joint Investigation Team reportedly remarked: “Kwon’s remarks promising returns could provide a key clue.”

The impact on Tether

Tether, the issuer of USDT, the world’s largest stablecoin is also facing heat from the LUNA/UST implosion.

Alexandre Lores, director of blockchain market research at Quantum Economics, said stablecoin issuers such as Tether should be subjected to external audits to verify underlying assets.

Nervous investors, shaken by LUNA/UST, have withdrawn over $7 billion from Tether.

This is a run, like one on a bank, and according to one opinion, the size of Tether poses a systemic risk. Note that large scale withdrawals can force Tether to liquidate its assets at sub-par prices that could ultimately result in losses for holders.

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Images of Luna and Supernova Explosion: Wikimedia Commons