South Korean businessman Do Kwon promotes the cryptocurrencies, Luna and Terra 

South Korean businessman Do Kwon promotes the cryptocurrencies, Luna and Terra 

South Korean businessman Do Kwon promotes the cryptocurrencies Luna and Terra USD, failing which some companies are doomed. But it is not an investment company that raises money fast.

Do Kwon, a South Korean waste trader, described the cryptocurrency he created in 2018 as "my biggest discovery" in numerous tweets and interviews. He explores the possibilities of currency exchange as he gathers a group of investors and supporters who proudly call him "crazy".

Who has raised more than $ 200 million to fund a money-laundering scandal involving investment firms such as TerraPharm Labs, Lightspeed ​​Venture Partners, and Galaxy Digital? The total value of Lunar is over $ 40 billion, which has created excitement. Founder of startups and rich investors

Quan sarcastically denied the allegations: "I do not argue with the poor."

But last week, Mr. Kaun Terra's USD-made Luna and other currencies became very popular. Their destruction dominated the rest of the cryptocurrency market. As a result, the value of bitcoin has plummeted and the cryptocurrency has lost 300 billion. This week, the price of the moon remained close to zero, while the TerraUSD continued to decline.

The demise of Luna and TerraUsD presents a case study of obscure advertising and when it all falls apart. Who has this bag? Mr. Quan was promoted by prominent financiers who are willing to subsidize high-value financial products. Some of these investors soon made huge profits by selling Luna and Terra USD coins as retailers face huge losses.

Investors in the company say Pantera Capital, a hedge fund that invests in Kaun's efforts, has returned about 100 times its initial investment after Lunar sold about 80 percent of its shares last year.

Pantera went from 1.1.7 million to about 170 million yen. Paradigm said the latest incident was "unfortunate". "A lot of retail investors have lost money. I'm sure there are a lot of institutional investors.

Mr. Quan did not respond to a request for comment. Other investors declined to comment.

Kathleen Breitman, the founder of the crypto platform Tejos, said that the rise and fall of Luna and TerraUsD were due to the irresponsible behavior of its supporters. "You see, a lot of people are trying to do business with a reputation for making quick money," he said. "They are trying to appease those who see their savings falling under their feet. There is no protection for that."

Quan, a 30-year-old Stanford graduate, claims to have founded Terraform Labs in 2018 after working as a software engineer at Microsoft and Apple (he had a partner, Daniel Shane, who later left the company). A state-of-the-art "modern financial system" without relying on consumer banks or other intermediaries can manage.

Mr. Shane and Mr. Quan began selling Luna currency in 2018. In 2020, Terraform launched Terraform, also known as stablecoin, a type of digital currency designed to be used as a reliable means of exchange. Stablecoins are usually invested in fixed assets such as the US dollar and their value should not fluctuate like other cryptocurrencies. Traders often use stablecoins to buy and sell other risky assets.

But TerraUSD is also dangerous by the standards of experimental crypto technology, unlike Stable Coin Tether. Because cash, treasury, or other general assets are not safe. Instead, it achieves virtual stability thanks to an algorithm that combines its value with the luna, and Cowan uses these two coins as the basis for decentralized finance. Or wider Defi lending and borrowing schemes in a complex world.

From the beginning, crypto experts believed that the algorithm would create a stable crypto pair for Mr. Quan. In 2018, a white paper was placed on the desk of Cyrus Younes, an analyst at the corrupt investment firm Scaler, outlining a proposal for a stable coin. Capital Mr. Younes sent a letter to his boss. He says the plan could fall into a "death spiral" where a fall in the value of the moon would destabilize the currency.

"I was very angry," he said in an interview. "Obviously it doesn't work."

As Luna noticed this, hacker Charles Cascarilla, founder of Paxos, a blockchain company that offers competitive stable coins, became famous. He expressed his skepticism about Luna's core technology in an interview last year (Mr. Quan responded sarcastically on Twitter, "Wtf is Paxos"), and hedge fund manager Kevin Xiao repeatedly It has been suggested that both currencies would be synonymous with cryptocurrency.

However, the organization's investment is aimed at financing projects. Investors including Arrington Capital and Coinbase Ventures have invested more than $ 200 million between 2018 and 2021, according to PitchBook. Accordingly, which tracks funding.

In April, Luna's price jumped from $ 1 to $ 116 in early 2021, giving rise to a generation of corrupt millionaires. A group of retailers formed around the coin, calling Cowan a cult hero. Galaxy Digital CEO Mike Novogratz, who invests in Terraform Labs, has announced his support for Luna Tattoo.

Kwon operates in South Korea and Singapore. Happily on social media in April, he announced that he had named his newborn daughter Luna, tweeting: "My favorite creations are named after my greatest invention."

Crypto Podcast: D-Fi host Brad Nickel said, "It's a cult of personality - arrogance, arrogance, doctor's attitude - it's awful.

Earlier this year, it sold a non-profit fund run by Mr. Quan Luna to investors for $ 1 billion. This money is used to buy shares in bitcoin, a reserve called TerraUSD, which is designed to keep prices stable in the event of a market downturn.

Meanwhile, some venture capital firms backing Mr. Quan have become embroiled in controversy. In December, venture capital firm Hack VC, which specializes in cryptocurrencies, sold Luna tokens. Ed Roman, the company's managing director, said it was partly because "we feel the market is going through a major downturn."

Martin Bowman, founder of CMCC Global, a Hong Kong-based venture capital firm. He said his company sold items at 100 won per coin in March. "We have growing concerns," he said in an email, both technically and organizationally.

Mr. Quan said corruption could be eradicated and it was publicly ridiculed that some corrupt businesses could eventually be affected. He said he was "satisfied" to see companies fall.

Last week, stagnant prices and strong economic trends sent panic into markets. The price of the month has dropped to almost zero. As expected by critics, TerraUSD fell 11 cents to 1 / pound this week. Within a few days, the corrupt ecosystem that Mr. Quan had created was almost useless.

He tweeted last week: "I'm so sorry for the inconvenience my invention has caused you all."

1 / Over the past few days, I've been talking on the phone with members of the Terra community - builders, community members, staff, friends, and family - who have been devastated by the US patch.

I am very sorry for the inconvenience my discovery has brought you all.

Some of Mr. Cowen's best investors lost money. Zhang Bing Xiao, CEO of Crypto Exchange Binance, which invests in Terraform Labs, said his company bought Luna for $ 3 million, valued at $ 1.1.6 billion. However, Binance never sold its tokens. Luna's shares are currently valued at less than 3,000.

For a large company like Binance, valued at $ 4.5 billion, the loss is still a drop in the ocean.

"Most venture capitalists have analysts who need to look at these things," Nickel said. "They must have thought they could cash in on the merchant."

The fall has taken a heavy toll on ordinary traders. On Evangelist Luna's Reddit forum, users have shared lists of suicide hotlines as investors in Luna or TerraUSD have expressed their frustration.

The crash also lost a large number of fans who started new companies using Mr. Quinn's corrupt infrastructure.

Neil Somani, 24, quit his job as a quantitative researcher at Citadel, a hedge fund, in February to work on a project that would link Lunaman China to another Ethereum cryptosystem.

In April, Mr. Somani joined Terra Hacker House, a month-long official program run by TerraPharm Labs in Chicago and its investors to develop Mr. Cowan's technology-based projects. Within weeks, Mr. Somani pledged $ 10 million in venture capital funding for the Terranova project, estimated at $ 65 million. He said that he is going to hire three employees and 40 customers are excited about this idea.

After the fall of the Luna and Terra USD, Mr. Somani and the hackers initially believed that Mr. Quinn and his associates could make a difference. But until last Tuesday, Mr. Somani felt it was over and was relieved that he had not yet accepted funding. He said he lost about $ 20,000, which did not bother him because he made money from stocks and other dangerous cryptocurrencies.

Hacker House tables were empty last week. The Earth Restoration Telegram Group, which has about 200 members, actively discusses projects and ways to save money.

Mr. Somani is anxious. "For those of us who are going to be corrupt, the mentality of being hungry and starving is really normal, and maybe that's what drew us to society," he said.

On Thursday, the Hacker House plans to showcase its outdated technology at Demo Day. He said most of the other bands have dropped out, so he expects less competition for the first prize of $ 50,000.

"In US dollars," he said. "I asked