South Korean Investors in the Shadow of Terra Luna

South Korean Investors in the Shadow of Terra Luna

South Korean investors are slowly emerging from the shadow of Terra Luna after being betrayed and duped by their countrymen. Terra Luna is back in the news as the United States and South Korea vie for the extradition of Terraform Labs co-founder and CEO Do Kwon, a Korean national who was recently arrested in Montenegro. The Korean crypto community is likely more invested in the outcome, but many prefer that Kwon be sent to the US, anticipating harsher punishment.

The Collapse of Terra Luna

The Korean won is the second most traded national currency for Bitcoin after the US dollar, according to Coinhills. A report by Korea’s Financial Intelligence Unit (FIU) in September 2022 revealed there were nearly seven million registered crypto users in Korea. The digital asset industry market size was nearly 23 trillion won for the first half of 2022, or close to 18 billion USD at current exchange rates. It dropped to 19 trillion won in the second half of the year after the Terra implosion.

The collapse of the Terra Luna stablecoin project resonated throughout the world, causing USD 60 billion to disappear. But the longest shadow fell over Korea, where it remains today. Terraform Labs co-founder and CEO, Do Kwon, will face a trial in Montenegro. He was arrested at the Podgorica Airport in Montenegro on March 23 while trying to leave for Dubai using a forged Costa Rican passport. Both South Korea and the United States are seeking his extradition.

Do Kwon Duped Koreans

The 2022 crash was all over the Korean media, which reported that the project had 200,000 local investors. "Even my grandpa knew about Luna," said Sung Mo Park, head of Korea business development at Polygon Labs. Projects that built on top of Terra found themselves homeless, at least temporarily. A once pro-crypto presidential administration started to appear much less enthusiastic. The state of crypto regulation in Korea today is not friendly.

Terraform Labs was based in Singapore, not Korea, but the project was largely backed by investors in Kwon’s native country. For many Luna investors, memories of the crash are vivid. There are stories of people selling their homes to invest in Luna, and speculation was rife that if Kwon had returned to Korea after the crash, he would have been killed.

The downfall of a prominent, Korean-born founder had a psychological impact. "Do was a very young Korean leader making a big change in the global scene. No software company in Korea was making that kind of impact on the global level," said Jiyun Kim, CEO and co-founder of DSRV, which ran a Terra validator in Korea. "He was a kind of north star for Korean crypto founders."

"Koreans don’t think Koreans are capable of going global," said Lloyd Lee, founder, and CEO of Hyperithm, a digital asset management firm that is based in both Seoul and Tokyo.

"There were two stars that broke that belief. One was (the K-pop boy band) BTS, and the second was Do Kwon."

What is your take on Do Kwon duping his countrymen? Please post your comments.