Connect with us

Published

on

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.

Read more about tech and crypto from CNBC Pro

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

Voyager Digital files for bankruptcy amid crypto lender solvency crisis

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. He cast 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.

Terra’s Anchor platform, which really helped to put UST on the map with its outsized return of 20%, could have been a big red flag for savvy investors. Many analysts believed it was unsustainable. At the time, government bonds were paying around 2% and savings accounts less than 1%. But investors piled in anyway, giving luna and UST a combined market value of almost $40 billion at one point.

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. 

Fatih Aktas | Anadolu Agency | Getty Images

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison in March for the massive fraud and conspiracy that doomed his cryptocurrency exchange and a related hedge fund, Alameda Research.

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.

Bankman-Fried plans to appeal his conviction and sentence.

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

Continue Reading

Environment

Tesla Cybertruck is in crisis: new discounts and throttling down production

Published

on

By

Tesla Cybertruck is in crisis: new discounts and throttling down production

The Tesla Cybertruck is in crisis. The automaker is still sitting on a ton of old inventory, which it is now heavily discounting, and it is throttling down production to try to avoid building up the inventory again.

When launching the production version of the Cybertruck in late 2023, Tesla CEO Elon Musk claimed that the vehicle program would reach 250,000 units a year in 2025:

“I think we’ll end up with roughly a quarter million Cybertrucks a year, but I don’t think we’re going to reach that output rate next year. I think we’ll probably reach it sometime in 2025.”

We are now in 2025, and Tesla is expected to currently be selling the Cybertruck at a rate of about 25,000 units a year – a tenth of what Musk predicted.

Earlier this month, we reported that Tesla began the second quarter with 2,400 Cybertrucks in inventory, valued at over $200 million.

Advertisement – scroll for more content

This is a real problem for Tesla as many of those Cybertrucks are older 2024 model year units not eligible for the federal tax credit, and even some ‘Foundation Series’, which Tesla stopped building in October 2024 – meaning that Tesla is sitting on some 6-month-old trucks in some cases.

Tesla is now offering deeper discounts on the new inventory of Cybertrucks. The discounts can go as high as $10,000, but the average one is closer to $8,000, which is more than the tax credit:

Despite Tesla’s efforts, the automaker has only reduced its Cybertruck inventory by about 100 units since the beginning of the month.

Tesla is now further throttling down production of the Cybertruck at Gigafactory Texas, according to a new report from Business Insider.

According to two Tesla workers speaking with BI, the automaker has reduced its Cybertruck production teams and now operates at a fraction of its original capacity. It also moved some Cybertruck production workers to Model Y production at the plant.

One of the workers said:

“It feels a lot like they’re filtering people out. The parking lot keeps getting emptier.”

As we previously reported, Tesla has been operating all its factories at approximately 60% capacity to avoid building up excessive inventory amid lower demand.

When it comes to the Cybertruck program, it sounds like Tesla is lowering production even further.

Last week, Tesla launched a new version of the Cybertruck in an attempt to boost demand, but it has been poorly received due to the automaker’s removal of many essential features.

Electrek’s Take

There are a lot of other automakers that would have already given up on the Cybertruck ith these results, but not Tesla. Musk is not one to admit defeat easily.

However, Tesla is running out of options.

The new Cybertruck RWD was a desperate attempt, and I doubt it will work. Now, it sounds like Tesla is further throttling down production – virtually confirming that the new trim didn’t help.

The next step would be a complete production pause.

Again, I don’t think Musk wants to admit defeat, but at some point, it’s inevitable.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Harley’s LiveWire unveils electric motorcycles built just for cops

Published

on

By

Harley's LiveWire unveils electric motorcycles built just for cops

LiveWire, the electric motorcycle brand spun out of Harley-Davidson, has officially launched a new line of electric motorcycles tailored for law enforcement and security use. The move marks another example of electric two-wheelers expanding beyond consumer markets and into professional and government fleets.

The company’s new LiveWire fleet program debuted with its electric motorcycle models adapted to include law enforcement-specific features like sirens, emergency lighting, and reinforced mounting points for gear. They are designed for urban patrol duties, security, and events where agility and low operational noise are critical.

As LiveWire explains, the electric drivetrain offers several advantages over traditional gas-powered police motorcycles, including lower maintenance needs, reduced operational costs, and near-silent operation. Those can be strategic advantages for many law enforcement departments. Instant torque and quick acceleration also give officers a performance edge in dense urban environments.

Additionally, the lack of a clutch and the ability to operate the motorcycle entirely with just the right hand and right foot, as opposed to a traditional motorcycle requiring the use of both hands and both feet, make the bikes ideal for reducing rider fatigue during long shifts and for low-speed operation like motorcade duty.

Advertisement – scroll for more content

Departments will be able to configure bikes with a range of custom options through LiveWire’s fleet division. The fleet program highlights benefits such as regenerative braking for improved efficiency, customizable ride modes, and short recharging times allowing officers to quickly recharge during shifts if needed.

The initiative comes at a time when interest in electric police vehicles is rising. Several major cities have already begun integrating electric vehicles including e-bikes into their fleets to reduce emissions and lower fuel costs. LiveWire’s dedicated police motorcycles could help fill a niche where traditional gas-powered motorcycles are too noisy, high-maintenance, or costly for modern policing needs. That’s exaclty what we’ve seen in the past when the original Harley-Davidson LiveWire electric motorcycle was already drafted into police department use years ago.

For now, LiveWire’s police models are targeting agencies across North America, but given the growing global demand for greener fleets, it’s likely we’ll see broader adoption if the program proves successful.

Electric motorcycles have also proven popular among police departments and security forces both in the US and around the world.

As electric vehicle technology continues to improve and charging infrastructure expands, it’s all but inevitable that more police and security fleets will gradually transition to electric models.

The combination of lower operating costs, easier maintenance, and environmental benefits makes electrification an increasingly practical and attractive option for public safety agencies.

Current battery technology, which generally provides around 100 miles (160 km) of range, positions these electric motorcycles ideally for urban law enforcement roles. This urban setting is precisely where their strengths become most apparent. Quiet operation, zero emissions, and significantly reduced maintenance costs make electric police motorcycles particularly beneficial for high-mileage city fleets.

via: Officer.com

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Archer unveils eVTOL air taxi network with United to connect passengers to all major NYC airports

Published

on

By

Archer unveils eVTOL air taxi network with United to connect passengers to all major NYC airports

Imagine landing at JFK or LaGuardia after a fun but taxing vacation, and instead of hailing a two-hour cab ride or asking your brother-in-law to come and get you, you take to the skies in an eVTOL. You’re back on the ground in 15 minutes for a short trip back home to bed. What a time to be alive. eVTOL developer Archer Aviation is making this dream a reality alongside its business partner, United Airlines, offering travelers to NYC a new map of air taxi routes to travel to and from NYC airports.

As you may or may not already know, Archer Aviation ($ACHR) is a Santa Clara, California-based aviation developer specializing in designing and developing electric vertical takeoff and landing aircraft, particularly for use in urban air mobility (UAM) networks such as air taxi services.

Archer remains one of the more exciting eVTOL developers we follow and stays relevant on our news beat with steady announcements of new partnerships with companies worldwide to develop and implement networks of sustainable air travel using its flagship Midnight eVTOL aircraft.

One of Archer’s long-standing partners has been Stellantis, which signed an agreement to become the exclusive manufacturer of Archer’s eVTOL technology at a new facility in the US, specifically Covington, Georgia. Last summer, Archer announced that a new US facility had completed construction, and Midnight eVTOL production was scheduled to begin in early 2025.

Advertisement – scroll for more content

In addition to Stellantis, plenty of other big names have invested in Archer and/or signed agreements with the eVTOL specialist, including Boeing and ARK Invest. Aviation companies like Southwest and Soracle in Japan have signed ventures to establish eVTOL air taxi networks in major metropolitan areas like Tokyo, Los Angeles, and Chicago – the latter of which comes via a landmark agreement with Signature Airlines signed in June 2024.

Another partner is United Airlines, which is working alongside Archer to establish a new eVTOL air taxi network around the NYC metropolitan area, connecting Manhattan to several nearby airports. You can see the NYC air taxi route map below:

Air taxi NYC
Source: Archer

Archer unveils eVTOL air taxi routes coming to NYC

Archer Aviation unveiled the initial route map for air taxi operations in NYC this morning alongside details of its ongoing partnership with United Airlines. The pending air taxi network includes vertiports at JFK, LaGuardia, and Newark Airports around NYC and a presence at regional airports and three helipads in the city itself.

Per Archer, the goal is to provide travelers with a new, safe, and sustainable method of transportation in which they can visit a nearby heliport and fly 5 to 15 minutes in a Midnight eVTOL to their destination as opposed to potentially sitting in hours of NYC traffic. Archer founder and CEO Adam Goldstein elaborated:

The New York region is home to three of the world’s preeminent airports, serving upwards of 150 million passengers annually. But the drive from Manhattan to any of these airports can be painful, taking one, sometimes two hours. We want to change that by giving residents and visitors the option to complete trips in mere minutes. With its existing helicopter infrastructure, regulatory support and strong demand, I believe New York could be one of the first markets for air taxis in the United States.

Thanks to its partnership with United, Archer said its future passengers can book air taxi flights in NYC as an “add-on” to their existing itinerary. As an example, the eVTOL developer said a customer would be able to take a Midnight eVTOL, which is designed to transport four passengers plus a pilot, from a vertiport downtown to the Newark Airport in less than ten minutes, then go through security and board their commercial flight as normal, saving tons of time along the way.

Source: Archer

As a long-term investor and customer in Archer’s eVTOL technology, United Airlines intends to work alongside its partner to help make these air taxi routes around NYC a reality. Andrew Chang, Head of United Airlines Ventures, also spoke:

At United, our focus is on driving innovation, reimagining the future of air travel and enhancing the customer experience every step of the journey. Our strategic collaboration with Archer will be key to our efforts to build and optimize the infrastructure – such as real estate development, air space management, and safety and security protocols – necessary to bring advanced air mobility to our customers.

Here is the full list of planned vertiports for air taxi travel around the NYC metropolitan area:

  • Major Airports: John F. Kennedy International Airport, LaGuardia Airport, Newark Airport
  • NYC Helipads: East 34th Street Heliport, Downtown Skyport, West 30th Street Heliport
  • Regional Airports: Westchester County Airport, Teterboro Airport, Republic Airport

The NYC network is a part of Archer’s more extensive plans to establish eVTOL air taxi travel across populated and traffic-dense areas in the US, including additional networks in San Francisco and Los Angeles. Archer shared it is currently working through the final stages of FAA approval to get those routes up and running.

A representative for the company shared the following update when asked when we might see Archer air taxi operations in the New York City area:

We’re taking a step by step approach for any new market we’re launching in, starting with a few aircraft on a few routes. We’ll ramp commercial operations upon receiving Type Certification from the FAA. We’re in the final stages of FAA type certification for Midnight, and once complete, we’ll be ready to begin commercial operations. We will start slowly, with a “crawl, walk, run” approach with Midnight’s roll-out. In the U.S., we’ve identified New York, Los Angeles, and San Francisco as our initial markets.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Trending