Arrest warrant issued for Do Kwon – the man blamed for 'crypto winter'

South Korea has issued an arrest warrant for Do Kwon, the founder and CEO of troubled cryptocurrency company Terraform Labs, which is blamed for a massive crash in cryptocurrency values. The warrant alleges that Kwon and others violated the nation's capital markets law, according to wire reports. All six individuals listed on …

[lglethal]

"Obviously, like in hindsight, it would have been good if I hadnt scammed all those people into thinking Terra was actually worth something. But hey, I made a ton of money, so we're all good, right?"

(What he really wanted to say, no doubt...)

[teknopaul]

I'll accept that he believed his own hype. There was nothing done in secret.

It was obviously bonkers from the outset.

There was no way it could be one to one backed by the dollar since someone has to pay wages and hardware.

Should defo go to jail tho, stupidity with 40 billion of someone else's money can not be forgiven

[sreynolds]

I am looking forward to the crypto ice-age....

Sorry, if the thing had an inherent value it would have rebounded by now. Is he the meteor that causes the extinction of the crypto currencies? I for one am hoping.

[Pascal Monett]

Re: I am looking forward to the crypto ice-age....

I'm with you on that one.

[Korev]

Re: I am looking forward to the crypto ice-age....

I think we need to run

terraform destroy -auto-approve

[teknopaul]

Re: I am looking forward to the crypto ice-age....

Should be pretty easy. It's a consensus protocol, you just need 51%. To do that with all the hashing for a _good_ transaction is impossibly expensive, but to do that with a reject tx and create a fork / kill everything just requires 51% of the nodes in the network.

Who would want to do that? Anyone with a hedge on the alternative coin.

I don't see why this hasn't happened more often. It happened once with bitcoin by accident but its trivial to force it if someone wants to.

[Anonymous Coward]

Re: I am looking forward to the crypto ice-age....

I may be misremembering the whitepaper, but a 51% attack might have been one of the short list of problems Terra/Luna DIDN'T have. It's a proof of stake system.

[An_Old_Dog]

Re: I am looking forward to the crypto ice-age....

Every time I read about crypto-currencies, in my head I hear David Byrne singing, "Burining Down the House".

[Youngone]

Re: I am looking forward to the crypto ice-age....

Every time I read about crypto-currencies I'm reminded that the US economy was crashed multiple times in the 19th and early 20th centuries by various unregulated or poorly-regulated financial opportunities.

Those who fail to study history are doomed to repeat it.

[Anonymous Coward]

Re: I am looking forward to the crypto ice-age....

There is more to launching a cryptocurrency these days, at least if you want it to get off the launchpad. Without a major redesign, Terra/Luna is fatally flawed and isn't coming back, and any prior investors have been permanently burned. That is the fair price for launching a cryptocurrency and not doing the math. So this on is a history lesson. There is some value in some of the technology they developed, but that won't raise the dead.

This helped pop a price bubble, but it isn't the first or the last the market has seen, and projects that lack the architectural flaws Terra/Luna had are moving ahead. There is a fair question how long or deep this dip lasts, and if the next peaks will be as high, but I see no reason to expect this is the end for anything but some of the 85% of projects that are total shitcoins. They were going to keel over anyway.

In a healthy world we will see two things, consolidation and regulation, and any of the projects that stay to the front of the pack on those fronts probably have a bright future.

[Michael Wojcik]

Re: I am looking forward to the crypto ice-age....

Nice thought, but it won't happen. There will always be a new crop of true believers. And cryptocurrencies are ideal for that purpose, because they're easy to explain in a vague, non-technical, hand-waving fashion for the foolish (such as celebrity endorsers), but wildly complex underneath to please the nerds.

And because they're online and involve no physical or face-to-face interaction, they can take advantage of network effects and quickly balloon to huge sums. And that means there will always be some people who bail out at the right point and end up with a real profit, to encourage the losers to try again.

"I've been disappointed by get-rich-quick schemes before, but here's a scheme that will get me rick – and quickly!" (Homer Simpson, and from memory, so probably not verbatim)

[Pascal Monett]

"Obviously, [..] a lot of the beliefs and sort of the conjectures that I had made were wrong,"

Yeah. For starters, dealing in funny money.

[Anonymous Coward]

Re: "Obviously, [..] a lot of the beliefs and sort of the conjectures that I had made were wrong,"

Yeah the math never added up, the "Algorithmic Stability" only held within a narrow bound, or as long as people poured in mountains of real money. There was no way that the network could hold a 1:1 pin under adverse conditions and the network code was written to kill itself trying.

Beyond that, too much of the networks volume was tied up in that 3rd party shady/ponzi loan scheme, promising unsustainable yields and an inevitable crash that took the whole network down.

[Anonymous Coward]

Re: "Obviously, [..] a lot of the beliefs and sort of the conjectures that I had made were wrong,"

That could be said of Holmes too - surely she believed one day she could hire someone who could design and build her magic machine really. Just money run out before she could find one, poor lassie - but deceiving people meanwhile to get more money to spend lavishly was not the right thing to do....

[doublelayer]

Re: "Obviously, [..] a lot of the beliefs and sort of the conjectures that I had made were wrong,"

Probably the same. Exactly how similar depends on when he realized his goals were not going to happen at all, and when he knew they weren't working yet. Holmes knew from the start that she was lying about her abilities and, from her actions, figured out eventually that it wasn't going to. He may have actually believed he was getting somewhere for longer. If he did, that just makes him marginally more sympathetic, not less culpable.

[spireite]

Crypto-currencies can't die fast enough

... yet, I have friends, colleagues, who still smell the (virtual) money, and refuse to smell the coffee.

Now, I appreciate that as a 50-plusser, my view on money is massively different to the Gen-whatever who are flinging money they think they can afford into crypto-currency.

Even ex-colleagues who did this up to 5 years ago, now say they'd not touch with a bargepole, but granted they gave the bag to the current holders and made real cash out of it.

[lglethal]

Re: Crypto-currencies can't die fast enough

Look, dont be too hard on the younger generations for looking for ways to make some money like this. A) young people tend to be more risk adverse (part of the learning experience), but more importantly, B) Most dont see a way based on current salaries and standard investments to be able to ever buy their own homes, or make similar personal investments.

House and Land prices are so high (and not showing any sign of coming down) that most young people on engineering level salaries wont be able to afford buying a house until there around 40 these days (especially after paying of student debts). If at all.

Interest rates are 0%, so there's no point saving in a bank. You could put any money you want to save into shares, etc. but growth is not that great unless you go high risk, so why wouldnt you go one step further on the risk/reward ladder and try your hand at crypto. And if you dont think that money in it's current level will be of any help to your long term hopes (i.e. buying a house), then why not gamble with it? Don't get me wrong, I think it's a stupid decision to make, but I can understand what drives it.

Governments really need to start doing more to stop properties being bought up by companies and landowners who are buying to turn the places into rental properties. Let the younger generations get on the property ladder, otherwise there will be a massive crisis in the future. We dont need to go back to the time of Lords and Serfs now do we?

[J. Cook]

On a side tangent...

So, I've been getting robocalls from companies (or realtors) trying to buy my house.

They get incredibly offended when I tell them that I'll only entertain a starting offer in the 10-50 million $USD range, and that it goes up every 90 seconds they keep me on the phone.

Strangely enough, I seem to be getting less of those now than when I started this tactic a couple months ago, so I guess it's working...

troll icon, because.

[An_Old_Dog]

Affordable home ownership

"Let younger generations get on the property ladder...". In Japan, they have multi-generational house mortgages. And I recall BitCoin was invented by that Japanese fellow, family name of Nakamoto. Hmm ...

[doublelayer]

Re: Affordable home ownership

Nakamoto was a pseudonym. The actual nationality of the person or persons who took on that name are unknown. A few people have claimed to be that person, but so far none from Japan and none with much proof of their claims. I wouldn't guess from the pseudonym that Bitcoin's founding was necessarily linked to someone with experience of the modern Japanese economy; even if they were of Japanese ancestry, there is a large diaspora of people from Japan throughout the Pacific.

[TJ1]

s/investors/gamblers/

Nothing more need be said.

[Anonymous Coward]

News Flash: Crypto Ice age to save the world from global warming!

How can we ever thank these heroes enough? I feel so ashamed now for being such a skeptic.

[Filippo]

The man who caused...?

If a crypto winter can be caused by the action of one man, then it was a bubble and has always been a bubble.

[Anonymous Coward]

Re: The man who caused...?

Soros and the Pound?

[BigSLitleP]

Re: The man who caused...?

"Brexit and the Pound?"

FTFY

[Anonymous Coward]

Re: The man who caused...?

I realise it may be before your time but that was insignificant compared to Black Wednesday.

[Potemkine!]

In South Korea one may be pardoned of his/her crimes only if his/her company is big enough

== Bring us Dabbsy back! ==

[Henry Wertz 1]

Fraud or incompetence?

I have no idea if this was fraud or incompetence. But what happened was: Terra were meant to be kept 1-to-1 pricewise with USD, but they were backed by Luna. Luna would be created or burned, and exchange rate between Luna and Terra adjusted, to maintain Terra's 1-to-1 ratio to US dollars. So (I think unsurprisingly?) when the price started dropping, the algorithm flipped out and created billions of additional Luna. They (both those running Terra and Luna, and those holding onto them) began burning off currency in an effort to reduce the supply and so increase the value of the currency they did not burn, to no avail.

Like (this is true of physical currencies too in the cases where they've had hyperinflation) you can SAY a currency should keep 1-to-1 correspondence with another currency all you want, but computers and blockchains aren't going to magically make it happen.

[Pirate Dave]

Arrest Warrant?

So did the text of the arrest warrant read:

If apprehended, please tie Kwon, Do

Sorry, yes, that's horrible. I shall sit in shameful silence for an hour.

[The Spider]

Re: Arrest Warrant?

... and so you should. Contrary to popular belief, they do not pronounce it like that in actual Korea.

[Winkypop]

“investors losing huge sums of money”

“Investors” seems a bit generous.

“Fools” has greater brevity and accuracy.

[Anonymous Coward]

"Steady lads, deploying more BS!"

The "crypto winter" was always happening anyway, Terra/Luna (and the resulting death of 3AC) was just the catalyst that accelerated it. The crypto space is dominated by kids with no experience or understanding of a proper bear market, many blinded by having made some easy money, and who were therefore easily fooled by the illusion of an "algorithmic stablecoin," part of a pair that had an inevitable death spiral coded in... "Steady lads, deploying more capital" will prove to be a meme much, much longer-lived than Terra/Luna.