South Korean authorities are seeking the arrest of Do Kwon, co-founder and chief executive officer of Terraform Labs. His company is behind the now-collapsed terraUSD and luna cryptocurrencies. South Korean prosecutors are now seeking to freeze bitcoin linked to Kwon.
Woohae Cho | Bloomberg | Getty Images
Months before Sam Bankman-Fried and the FTX fraud was exposed, and years before Binance and its founder, Changpeng Zhao, would admit fault and settle with the U.S. for several billion dollars, Do Kwon was widely regarded as crypto’s top villain for nearly dismantling the entire sector with his failed U.S. dollar-pegged stablecoin.
It was May 2022, and Kwon was riding high. His company, Terraform Labs, was behind one of the most popular U.S.-pegged stablecoins on the planet, the venture funding was rolling in, his coins (dubbed terra and luna) were collectively worth tens of billions of dollars, and like Bankman-Fried, Kwon had landed a spot on the prestigious Forbes 30 under 30 list.
Perhaps in his greatest show of confidence in the empire he had built, just one month before it all collapsed, Kwon posted that he named his newborn daughter Luna. “My dearest creation named after my greatest invention,” he wrote.
And then it all came crashing down.
Whereas most stablecoins are backed up by a mix of cash and other assets to match the value of tokens in circulation, Kwon’s invention was instead backed by a complex set of code. When the algorithm failed in May 2022, it cost investors $40 billion in market value overnight, led to devastating losses to multiple investors, and contributed to the collapse of hedge fund Three Arrows Capital in June 2022, followed by crypto lenders Voyager Digital, then BlockFi, then Genesis — and, in a roundabout way, FTX too.
The stablecoin’s implosion also rocked confidence in the sector and accelerated the slide in cryptocurrencies already underway as part of a broader pullback from risk.
In the years since, U.S. criminal, civil, and bankruptcy courts have been cleaning up the wreckage, in part, by prosecuting bad actors and fining fallen firms. This week, a judge signed off on Do Kwon and his bankrupt Terraform Labs settling with the U.S. Securities and Exchange Commission for $4.5 billion. This comes after a jury unanimously found Kwon and his company liable for securities fraud following less than two hours of deliberation.
How Kwon, who is currently in the Balkans — or Terraform Labs, which remains in bankruptcy and, according to court testimony, only has around $150 million in assets — will be able to pay the fine remains unclear. But it does serve as the latest example of crypto’s bad actors atoning for past sins.
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In April, Binance’s founder and ex-CEO was sentenced to four months in prison after settling with the U.S. Justice Department, Commodity Futures Trading Commission and the Treasury Department for $4.3 billion in November. A few weeks before that, in March, the FTX founder and ex-CEO was sentenced to 25 years in prison. Celsius CEO Alex Mashinsky starts his jury trial later this year, in September.
The washout of crypto’s previous class of tycoons comes as the digital asset market matures and gains the backing of Wall Street’s top brass.
Token prices are in the midst of a bull run, with bitcoin reaching a new all-time-high above $73,000 in March. Meanwhile, some of the biggest names in traditional finance have jumped into crypto in the last year, as firms including BlackRock and Fidelity issue billions of dollars worth of spot bitcoin exchange-traded funds in the U.S.
Here’s a rundown of where the culprits who nearly blew up crypto are today, including those who remain on the lam.
Terraform Labs’ Do Kwon
A police officer escorts Terraform Labs co-founder Do Kwon after he served a sentence for document forgery in Podgorica, Montenegro, March 23, 2024.
Stevo Vasiljevic | Reuters
Kwon is currently living in a sort of legal and social purgatory in the Balkans.
The 32-year-old fugitive is holed up in Montenegro after months on the run that involved leaving Singapore for a mix of destinations, including Dubai, Serbia, and Montenegro. He’s been there since March of last year, following a failed attempt to flee from Podgorica to Dubai on a jet with a fake passport. Do Kwon is out on bail but bound to the Balkan state, until the country’s Supreme Court decides whether to ship him back home to South Korea to face trial, or to the United States, where the former crypto tycoon has been tried in absentia and found guilty on civil charges.
As for criminal repercussions for Kwon, it all depends on what the Montenegrins decide.
U.S. judges have been coming down hard on the crypto criminals who cost retail investors tens of billions of dollars, but South Korea doesn’t plan to go easy either, with one prosecutor reportedly saying that he expected Kwon to face the longest jail term for a financial crime in the country’s history, which could top 40 years.
The crime goes back to the fall of terraUSD (UST) and its sister token luna in May 2022, which had been one of the most popular U.S. dollar-pegged stablecoin projects.
Kwon had a knack for convincing people to buy what he was selling. Most notably, he sold his vision of a new kind of payment system that would upend the status quo and replace the world’s currencies.
TerraUSD (also called UST) and its sister token, luna, moved in lockstep. UST functioned as a U.S. dollar-pegged stablecoin meant to replace global fiat transactions, while luna helped UST keep its peg and earned investors a killing as it appreciated in value. (In 2021, luna was up 15,800%.) Traders were also able to arbitrage the system and profit from deviations in the prices of the two tokens.
The setup wasn’t new. Algorithmic stablecoins, which rely on a complex set of code rather than hard currency reserves to stabilize their price, had been a thing since at least 2015 — and the idea of staking crypto to earn an unrealistically high return exploded in popularity alongside the rise of decentralized finance, or DeFi.
But Kwon had a real touch for marketing. Hecast himself in the likeness of a next-gen Satoshi Nakamoto (the pseudonymous name given to the founder of bitcoin), crossed with the social media swagger of an Elon Musk.
Kwon raised $207 million for his Terraform Labs, which launched luna and UST, and an aggressive online posture, in which he shunned the “poor” (that is, luna skeptics) on Twitter, drew in the masses. He inspired an almost cult-like following of self-identifying LUNAtics — including billionaire investor Mike Novogratz, who went so far as to memorialize his membership in this club with a tattoo on his arm.
Overnight, both tokens plunged in value and were essentially worthless. The failure was so massive, it helped drag down the entire crypto asset class, erasing half a trillion dollars from the sector’s market cap. It also dented investor confidence in the whole space.
It was reportedly Kwon’s second failed attempt at launching an algorithmic stablecoin, though his first effort saw losses in the range of tens of millions of dollars, rather than tens of billions.
“This case affirms what court after court has said: The economic realities of a product — not the labels, the spin, or the hype — determine whether it is a security under the securities laws,” said SEC Chair Gary Gensler in a press release.
“Terraform and Do Kwon’s fraudulent activities caused devastating losses for investors, in some cases wiping out entire life savings. Their fraud serves as a reminder that, when firms fail to comply with the law, investors get hurt. Terraform and Kwon fought our efforts to investigate – taking a fight over investigative subpoenas all the way to the Supreme Court. Thankfully, with this settlement, the victims of their massive fraud will now get some justice.”
FTX’s Sam Bankman-Fried
NEW YORK, US – JANUARY 03: Sam Bankman-Fried leaves the court in New York, on January 03, 2023.
The sentence in Manhattan federal court was significantly less than the 40 to 50 years in prison that federal prosecutors wanted for Bankman-Fried, but it was much more than the five to six-and-a-half years suggested by his attorneys.
“There is a risk that this man will be in position to do something very bad in the future,” Judge Lewis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion in forfeiture to the U.S. government.
“And it’s not a trivial risk at all,” Kaplan added.
Kaplan noted he has never heard “a word of remorse for the commission of terrible crimes” from Bankman-Fried.
The judge said that in the 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s trial testimony.
If Bankman-Fried was not “outright lying” during cross-examination by prosecutors, he was “evasive,” Kaplan said.
“There is absolutely no doubt that Mr. Bankman-Fried’s name right now is pretty much mud around the world,” the judge said.
Jurors at trial likewise did not buy Bankman-Fried’s version of events, convicting him in November of seven criminal counts and holding him responsible for losing about $10 billion in customer money due to the securities fraud conspiracy.
Prosecutors said Bankman-Fried led a conspiracy to loot customer money to make investments, fund political donations to both Democrats and Republicans, and for his personal use, as well as to repay loans taken out by Alameda Research.
Ryan Salame, a former top lieutenant of FTX founder Sam Bankman-Fried, has been sentenced to 90 months, or seven and a half years, in prison, followed by three years of supervised release.
Three other people, who all testified against Bankman-Fried at trial, are awaiting their own sentencings after pleading guilty to criminal charges related to FTX and Alameda Research.
They are Caroline Ellison, the Alameda Research CEO who at one time dated Bankman-Fried; FTX engineering chief Nishad Singh; and Gary Wang, the co-founder and chief technology officer of FTX.
In May, the bankruptcy estate of FTX announced that almost all customers would get their money back — and more. The collapsed exchange said it has between $14.5 billion and $16.3 billion to distribute to creditors and that FTX users whose claims were $50,000 or less would receive approximately 118% of the amount of their allowed claim, according to the proposed reorganization plan.
Binance’s Changpeng Zhao
Former Binance CEO Changpeng Zhao, center, departs federal court in Seattle on April 30, 2024.
Jason Redmond | AFP | Getty Images
Binance’s billionaire founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California, according to the Bureau of Prisons website.
Zhao was sentenced to four months in prison in April after pleading guilty to charges of enabling money laundering at his crypto exchange.
The sentence handed down to the former Binance chief was significantly less than the three years that federal prosecutors had been seeking for him. The defense had asked for five months of probation. The sentencing guidelines called for a prison term of 12 to 18 months.
“I’m sorry,” Zhao told U.S. District Judge Richard Jones before receiving his sentence, according to Reuters.
“I believe the first step of taking responsibility is to fully recognize the mistakes,” Zhao reportedly said in court. “Here I failed to implement an adequate anti-money laundering program. … I realize now the seriousness of that mistake.”
In November, Zhao, commonly known as “CZ,” struck a deal with the U.S. government to resolve a multiyear investigation into Binance, the world’s largest cryptocurrency exchange. As part of the settlement, Zhao stepped down as the company’s CEO.
Though he is no longer running the company, Zhao is widely reported to have an estimated 90% stake in Binance.
The scope of his alleged crimes included willfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and allowing Binance to process transactions involving proceeds of unlawful activity, including between Americans and individuals in sanctions jurisdictions.
The U.S. ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine. The SEC was noticeably absent from the joint effort by the DOJ, CFTC and Treasury against Binance and its founder.
Fallen crypto tycoons awaiting judgement
Voyager said it has roughly $1.3 billion of crypto on its platform and holds over $350 million in cash on behalf of customers at New York’s Metropolitan Commercial Bank.
Justin Sullivan | Getty Images
The fall of crypto hedge fund Three Arrows Capital, and lenders Voyager Digital and Celsius, can all be traced to the collapse of Kwon’s stablecoin project.
When 3AC’s lenders asked for some of their cash back in a flood of margin calls, the money wasn’t there. Many of the firm’s counterparties were, in turn, unable to meet demands from their investors, including retail holders who had been promised annual returns of 20%.
The three companies all went bankrupt and are currently at various stages of settling their debts, with Celsius having just emerged from bankruptcy in January.
Celsius’ ex-CEO Mashinsky faces criminal trial in the U.S. later this year, while 3AC co-founder Kyle Davies says he’s not sorry for the collapse of his fund, and has so far managed to avoid jail time altogether by bouncing around the world, unlike his co-founder, Su Zhu, who served time in a Singaporean prison.
The Hyundai IONIQ 5 got a raft of upgrades and sporty, rally-focused XRT trim level for 2025 – but the biggest upgrade for the Made in America Hyundai might be this: the 5 has regained eligibility for the full $7,500 federal EV tax credit!
Despite being assembled at Hyundai’s Georgia meta plant for the last four month, the 2025 Hyundai IONIQ 5 was nowhere to be found on the EPA’s list of rebate-eligible vehicles. But that was then – with a fresh updated to the list coming online May 1st, Hyundai’s new-age electric hot hatch is back in the rebate game.
As if to celebrate, Hyundai announced that it was taking on the celebrate One Lap of America road rayy and race event in a factory collaboration with the track-focused enthusiasts at Grassroots Motorsports this week with One Lap veterans Andy Hollis and Tom Suddard campaigning a stock, 601 hp 2025 Hyundai IONIQ 5 N in the Alternative Fuels class.
“After winning our class in a gutted, caged race car last year, we wanted to compete in the best-of-all worlds this year: A vehicle that’s incredibly fast, incredibly comfortable on a road trip, and incredibly capable on a racetrack,” explains Suddard. “Electrification means it’s finally possible to have huge power without huge compromises in a street car, and the IONIQ 5 N promises to pair that huge power with the durability and capability to survive a week of racing.”
One Lap is widely regarded as one of the toughest street-legal motorsports events in the world, pitting amateur and professional drivers alike compete in stock and heavily modified vehicles of every description, battling it out in a series of scored challenges, including timed events at road courses, drag strips, skid pads, and autocross courses.
In between tracks, competitors safely travel thousands of miles around the country, proving the mettle and durability of the vehicles and the teams that drive them. This year, 86 teams from all over the country will compete in 17 scored events over the course of eight days at tracks like Virginia International Raceway and NCM Motorsports Park.
The Tire Rack One Lap of America is currently underway – you can track the Hyundai’s progress here, then let us know what you think of this new tax development in the comments.
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With the launch of the first-ever Class 8 vocational EV in the North American market, PACCAR Kenworth is raising the battery-electric bar and underscoring just how far the market has come since the Tesla Semi made its debut nearly a decade ago.
When Tesla pulled the wraps off its all electric Semi truck all the way back in November of 2017, the rest of the industry was hardly thinking about BEVs. Nearly a decade later, the world is still waiting for the Semi to begin regular production, and PACCAR is launching its second generation of HDEVs with the debut of this, the all-new Kenworth T880E vocational truck.
“The Kenworth T880E marks a groundbreaking milestone in Kenworth’s history as we bring to market the first Class 8 battery-electric solution built for vocational applications,” explains Kevin Haygood, Kenworth assistant general manager for sales and marketing. “The T880E is engineered to meet the evolving needs of operators and vocational fleets while still providing the durability, reliability and customization our customers expect.”
The new electric K-whopper is motivated by PACCAR’s in-house ePowertrain platform, capable of putting up to 605 hp and 1,850 lb-ft of peak torque to work, while delivering the same levels of drivability and dependability fleets expect from a Kenworth – but power and torque are only part of the T880E’s work-ready résumé.
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Open to work
Kenworth T880E; via PACCAR.
In addition to a stout, Class 8 electric chassis fitted with heavy-duty Kenworth brakes and axles, the T880E’s central drive eMotor allows for significant wheelbase flexibility so fleet buyers can spec out exactly the machine they need to get the job done. The T880E was also designed to enable lift axle installations from trusted Kenworth upfitters for a vocational-friendly BEV integration.
Additionally, the T880E features a wide selection of factory-installed options that include both high- and low-voltage ePTO (electric Power Take Off) ports, mechanical ePTOs, and the same wide array of body configurations as the ICE version.
Speaking of the ICE version, the electric T880E also can also be had in the same set-back front axle and set-forward front axle configurations with the same multi-piece hood construction. Inside the cab, the latest in driver-focused technology includes the Kenworth SmartWheel and a new 15″ DriverConnect digital touchscreen. Dash and vocational features like RAM Mounts and factory-installed PTO switches are available. The T880E is also offered with Kenworth ADAS packages for customers interested in DigitalVision Mirrors, Bendix Fusion, and Lane Keeping Assist.
It’s so big, you guys
Kenworth T880E; photo by the author.
The T880E was on static display at last week’s ACT Expo in Anaheim, California. Check with your local Kenworth dealer for availability.
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The tire-blistering SU7 Ultra has been the Xiaomi brand’s flagship super sedan since its launch, but a controversial software setting has limited the car to “just” 900 hp in regular driving – resulting in an outcry from owners who ponied up for the big boy numbers. With its latest software update, that missing 648 hp is back on tap!
The SU7 Ultra made waves throughout the performance car world when a bright yellow striped example lined up alongside a white quarter mile king, the 1,000+ hp Tesla Model S Plaid, and promptly smoked it.
That wasn’t all. A preproduction SU7 Ultra prototype lapped the legendary Nürburgring circuit in just 6 minutes and 46.874 seconds, firmly stamping the 1,500+ hp Xiaomi’s alphanumeric into the track’s record books with a time nearly fifteen seconds quicker than a Rimac Nevera or, on the ICE front, either a Corvette ZR1, Viper ACR, or Porsche 918 (take your pick).
It’s hardly any wonder, then, that the customers who signed up – in droves, too – were disappointed to learn that the SU7 they were allowed to buy had been neutered by the safety nannies to the tune of nearly 650 hp. (!)
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We’re so back
The outrage from SU7 Ultra owners was immediate. And, facing mounting pressure online and on social media, Xiaomi ultimately decided to withdraw the performance-limiting features while acknowledging the need for more transparent communication about future software updates they messed up, saying in a statement, “we appreciate the passionate feedback from our community and will ensure better transparency moving forward.”
So, rich people can rocket themselves down the road in 9 second hypercars again and all is right with the world. A happy ending – but one that sort of illuminates a fresh set challenges for automakers peddling “software-defined vehicles” to a market that still thinks of their cars as very much hardware defined products.
The new reality is playing out in real time now, and the Jeff Bezos-backed $20,000 electric compact pickup from Slate Auto is going the other way entirely – time will tell whether more, or less tech is the answer.
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