{"id":2199927,"date":"2023-01-19T10:19:30","date_gmt":"2023-01-19T10:19:30","guid":{"rendered":"https:\/\/www.nknews.org\/koreapro\/?p=2199927"},"modified":"2023-04-05T16:10:19","modified_gmt":"2023-04-05T07:10:19","slug":"why-collapse-of-south-korean-blockchain-wont-derail-countrys-crypto-market","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/01\/why-collapse-of-south-korean-blockchain-wont-derail-countrys-crypto-market\/","title":{"rendered":"Why collapse of South Korean blockchain won\u2019t derail country\u2019s crypto market"},"content":{"rendered":"
South Korea, a growing cryptocurrency market <\/span>worth<\/span><\/a> over $200 billion, is home to almost <\/span>7 million<\/span><\/a> users and is the second biggest in East Asia after China. This strong rate of adoption might partly be due to a highly <\/span>digital culture<\/span><\/a> and the <\/span>volatility<\/span><\/a> of the South Korean won (KRW). However, the spectacular collapse of the Terra Luna cryptocurrency, led by South Korean entrepreneur turned international fugitive Do Kwon, has rattled the country\u2019s digital assets industry.<\/span><\/p>\n The government has called for greater transparency and accountability in the sector and is also looking into regulating the industry more effectively. However, even with more regulations on the way, it does not appear that it will derail the country\u2019s appetite for cryptocurrencies.\u00a0<\/span><\/p>\n TERRA LUNA<\/b><\/p>\n Do Kwon, who was born in Seoul but set up his crypto company Terraform Labs in Singapore, presided over a cryptocurrency called Luna ($LUNA) and an associated \u201cstablecoin,\u201d TerraUSD ($UST). The two were closely related, with traders able to swap a unit of $LUNA for $UST and vice versa.\u00a0<\/span><\/p>\n $UST was designed to maintain a peg to the dollar and <\/span>operated<\/span><\/a> as a \u201cdecentralized algorithmic stablecoin,\u201d which meant that the coin was not backed by any underlying assets or cash reserves. Instead, the plan was for $UST to maintain its peg through a mechanism that either created new coins or destroyed old ones, depending on demand.<\/span><\/p>\n However, in April 2022, investors began to sell off large amounts of the coin, at which point this mechanism failed. TerraUSD quickly lost its peg and plunged in value, which also caused its sister coin, $LUNA, to nosedive. While it is still possible to purchase a $LUNA coin, at the time of writing, the coin was <\/span>trading<\/span><\/a> at $0.000180 <\/span>\u2014<\/span> a drop of 99.9998% since its all-time high of $119.51.<\/span><\/p>\n ON THE RUN<\/b><\/p>\n While the collapse of Terra Luna <\/span>reverberated through<\/span><\/a> global crypto markets, South Korea was at the center of the story. According to the Financial Services Commission, the country\u2019s financial regulator, around <\/span>280,000<\/span><\/a> South Koreans had invested in Terra Luna, some of whom lost their <\/span>life savings<\/span><\/a>.\u00a0<\/span><\/p>\n As a result, in <\/span>Sept. 2022<\/span><\/a>, prosecutors in Seoul issued a warrant for Do Kwon\u2019s arrest, accusing him of fraud and violating capital market laws.<\/span><\/p>\n Law enforcement officials believe that Do Kwon <\/span>traveled<\/span><\/a> from Singapore, where he was living at the time of the collapse, to Dubai and then to Eastern Europe. South Korean prosecutors believe that Do Kwon is currently in <\/span>Serbia<\/span><\/a>, but there has not yet been any sign that Belgrade will seek to extradite him to Seoul.<\/span><\/p>\n The fate of Do Kwon remains in the balance, with authorities still attempting to get him before a court in Seoul. But the collapse of Terra Luna <\/span>\u2014<\/span> along with subsequent debacles such as the equally spectacular <\/span>downfall<\/span><\/a> of global exchange FTX <\/span>\u2014<\/span> has sparked calls in South Korea for greater regulation of the space. Some individuals claimed to lose <\/span>millions of dollars<\/span><\/a> as a result of the Terra Luna fiasco and whole swathes of Korean retail investors were left in the lurch.<\/span><\/p>\n