A Conversation with Do Kwon: The Accusation, the Manhunt, and the Terra Founder's Faith and Confession

Original Author: Laura Shin

Original compilation: Colin, SevenUpDAO Returnees Association

Ever since Terra fell in the spring, people started to care a lot about what happened, and there was a lot of interest in Do Kwon.

The case escalated in September when South Korea issued a warrant for his arrest. According to reports, he himself may not be in Singapore anymore, even Interpol may be in the process of finding him now, I thought Do will not talk to the media because of his lawsuit, but he surprised me last week, he Agree to participate in the program.

I am conducting this interview with an open mind and the main intention is to reveal more information and allow legal experts to decide these issues. If I think he didn't answer my question, I will keep asking until I have a satisfactory answer.

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Allegations from South Korea

Laura Shin: Terra’s UST and Luna may have caused investors a loss of up to 60 billion U.S. dollars. South Korea has issued a warrant for you, and even Interpol has also issued a warrant for you. Why didn’t you return to South Korea?

Do Kwon: Let's clear up the situation, as far as I understand Interpol doesn't make a clear statement on its website, Korea just interpreted the notice in his own way. The second point is that I have not lived in Korea since the end of last year, so it is not accurate to say that I am going back to Korea, it should be said that I may travel to Korea.

Laura Shin: Your arrest warrant and charges are based on South Korea's capital market law, how do you view these charges?

Do Kwon: South Korea's capital market law is a bit like financial regulation. The Korean authority in this area is called FSC Financial Services.

I think from the perspective of similar committees in the United States, it is the merger of the US Securities and Exchange Commission and the US Securities and Exchange Commission, but it is more responsible for the design of the financial regulatory system than enforcement. The South Korean government has directly stated that cryptocurrencies are not securities, and they have a different definition from the United States.

For this reason, I don't think cryptocurrencies fall under its jurisdiction. So I'm a little bit disappointed that they've made this decision, which should be the domain of the legislature, and financial regulators shouldn't be too involved.

Laura Shin: So you don't think the arrest warrant from them is legal right?

Do Kwon: I haven't seen an exact copy of the arrest warrant, and the data I've got is all from the media, so I think there's a lot of contradictory information in it.

The South Korean government’s previous stance has been that cryptocurrencies should not be regulated by capital markets, just like they are not securities. The government has previously expressed to us that it encourages the growth of our digital assets, so I find it difficult to believe that these allegations are legitimate and supported by the political system.

Laura Shin: I noticed that in August you said that you would actively cooperate with the South Korean government, but when the arrest warrant came out, your attitude changed, so you no longer cooperate, right?

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hiding place

Laura Shin: You've been tweeting that you're not running or hiding, but the media thinks you're no longer in Singapore, so where are you?

Do Kwon: I have read all the allegations that I am at large and they all think that I left Singapore because of the debacle that happened in May. But that's definitely not true.

The main reason I don't want to talk about my location to the media is that when the May debacle happened, I had a lot of physical threats, like, someone breaking into my apartment building. Several of them were journalists, and the rest were ordinary people. I feel that they pose a considerable threat to personal safety, and also hinder my privacy and violate my personal interests.

I don't want to reveal where I live just because if the place I live becomes well known then it's almost impossible for me to live there anymore.

Laura Shin: Can you at least answer if you are in Singapore?

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South Korea lied?

Laura Shin: South Korea claimed that they froze your $67 million in encrypted assets, and you tweeted to deny this. What is your comment on this incident?

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arrogance on twitter

Laura Shin: When Terra was on the rise, you tweeted a lot of arrogance, do you regret your arrogance?

Do Kwon: I really enjoyed interacting with other people on Twitter and being outspoken at times. Looking back now, I should have had stricter standards for myself.

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Right to Confession

Laura Shin: What would you like to say to many people who lost their life savings and committed suicide because of Terra?

Do Kwon: Whatever design flaws Terra has, that doesn't excuse me from responding to these things. It is my responsibility not to let people notice the cruelty of the market in advance.

For users, there is nothing wrong with sending tokens to Terra's ecosystem. Terra had hundreds of thousands or even millions of users at the time, all based on the stability of UST. It's hard for me to put into words how sad I am about the financial and emotional toll that has taken place here.

Laura Shin: I want to ask a question, you said you take full responsibility, but I don't seem to hear an apology like "I'm sorry".

Do Kwon: Of course, I'm sorry for these users. But I never meant to do that, we've been using reports or things like that in response to allegations or things like that. I have been a firm believer in the stability of UST before, but users may not understand the economic mechanism that led to our ultimate failure, which is the responsibility we are trying to take.

A lot of people have suggested that this is a fraud or a Ponzi scheme or accused us of shorting UST or misappropriating user funds or something like that. I understand their sentiments, but we definitely don't think so. I have been a founder in the crypto space, I have been transparent and open for the past five years, and I am proud of the integrity of the path to this day. We're trying to defend the values ​​of crypto with Terra, not trying to create a protocol that ultimately fails and destroys billions of dollars in value.

Laura Shin: What was the financial situation for you and your family when Terra was on the brink?

Do Kwon: My family, like my wife, doesn't own any real estate, like an apartment in Seoul. We also did not transfer funds from Singapore to the British Virgin Islands. We have established a corporate structure with a holding company in Singapore.

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Anchor Yield

Laura Shin: Regarding the interest rate of Anchor, a report from South Korea said that the interest rate of Anchor was determined by a core developer at the beginning, which was 3.6%, but before the product was launched a week ago, the interest rate was changed to 20% by you. Why is this? ?

Do Kwon: That's not true. The developers who claim to be the core developers of Terra on the Korean show are actually just some of our interns. If you browse Github or any open source documentation, we've documented their contributions on it, so it's hard for me to imagine how they dare claim to be a core developer.

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19 years of hard fork

Laura Shin: Let's talk about Terra's hard fork in 2019. At that time, a line of code changed the address of Terra's investor TransLink after the hard fork. Things like this should be openly discussed in the community, but it's not being done in the Terra community, why?

Do Kwon: I remember there were public discussions. But we have to remember that when Terra was first launched in 2019, there was no meaningful community like Ethereum. There were very few people at that time, so there was no particularly big discussion.

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Compensation for UST Holders

Laura Shin: On May 21, you said on Twitter that people who suffered losses due to UST can receive compensation in USDT or USDC, starting with small holders first. When will this happen?

Do Kwon: LFG is not yet in a state where it can clearly dispose of assets. Various civil actions against LFG limit our disposition of assets. I don't know how long this process will last, but I hope it ends soon.

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Feelings after failure

Laura Shin: There were some extreme highs and extreme lows in your young life. Stanford undergrad This is obviously seen as an achievement, but you also become the biggest cryptocurrency star in South Korea, notorious of course. The South Korean government wants to arrest you, what do you think?

Do Kwon: To be honest, I think it will take years to digest.

One thing I'd like to clarify first is that some of the digests or anything like that I tweeted was never about the money, I just love the jokes.

One of the things that I hope will clarify in the next few years is that what happened to Terra was not a scam or a fraud, it was just a massive market failure. At the same time, I still believe in the necessity and feasibility of decentralized algorithmic stablecoins.

A lot of people thought I was an idiot, buying bitcoin right before it was about to crash or something like that. But from the perspective of the founder of an encryption project, as long as everyone has confidence in encryption, the encryption industry will become better. I'm still willing to contribute.

Laura Shin: I'm curious, if you could travel back now, what would you do?

Do Kwon: Then I will definitely make a lot of changes. For example, I will know that reserves are more important, and I will be less aggressive and less joking.

Twitter is definitely where I will make a big change, I will spend less time on social media and it will help me get more work done.

My next attempt is still in the decentralized currency space, but maybe not a stablecoin, maybe not pegged to the dollar, maybe have a different type of reserve. I firmly believe that building a decentralized currency is one of the important problems that cryptocurrencies must get right, it is fundamental to our industry.

I think in terms of recent regulatory crackdowns, censoring transactions and arresting developers from Tornado Cash and things like that, it shows that we need to work towards a decentralized future.

Developers need to learn from what happened here and keep trying to create decentralized currencies. Our experience is not all failures, we have built interesting applications, and our development history is very valuable for others to create decentralized currencies.

I still want to contribute for sure, all cryptocurrencies are highly experimental right now, and I plan to keep building, keep working.