In the volatile world of cryptocurrencies, fortunes can be made and lost quickly. But this May’s crypto crash has been particularly devastating for one man in South Korea.
The sudden crash of two digital currencies earlier in the month stunned investors and wiped $400 billion from the value of many other cryptocurrencies, including the largest: bitcoin.
Now people around the world who have lost their life savings are asking for help.
A desperate man has been arrested after visiting the home of the elusive businessman at the center of the “crypto crash.” He told the BBC that his life was in tatters .
“I felt like I was going to die,” says the cryptocurrency streamer known as Chancers. “I lost quite a bit of money in a short period of time. About $2.4 million of my cryptocurrencies disappeared.”
Chancers started investing in cryptocurrencies in 2017, and says he got rich in the last five years , as the value of bitcoin and other digital currencies grew.
“Here in Korea I was in the bottom 1% in terms of my finances. But because of the crash, now I’m in trouble,” he told the BBC.
Chancers invested $800,000 of his money in a digital token called Terra Luna at the worst possible time.
Terra Luna gained popularity in December 2021, when the value of each coin began to increase: from 5 to a maximum of 116 dollars in April of this year.
Like many people, Chancers made a big bet that the currency was going to rise higher.
But suddenly, on May 9, it crashed, losing 99% of its value in 48 hours .
Now, each Terra Luna coin is worth less than $0.0002, or two-hundredths of a cent.
Terra Luna’s fall began when its sister cryptocurrency, TerraUSD, suddenly lost value, experts argue.
TerraUSD is what is known as a “stable price coin”, a crypto token that is supposed to prevent large fluctuations in values. The companies that back stablecoins try to ensure that they remain at parity with assets like the dollar: that one token equals one dollar , for example.
But when the value of TerraUSD fell, a panic sale began and Terra Luna – algorithmically linked to TerraUSD – simultaneously plummeted.
The rest of the crypto world watched the implosion in horror and withdrew billions of dollars backing other cryptocurrencies.
At the center of the chaos is Do Kwon, an admittedly media-shy man who was the inventor of the Terra system on which both currencies were based.
Thousands of people flocked to the 30-year-old on social media, seeking answers and a plan to save the day.
But in his desperation, Chancers decided to go one step further.
Enraged at not being able to contact Kwon, he searched the net for his whereabouts and found the crypto-millionaire’s address in Seoul .
“I wanted to ask him about his plans for Luna. I had a huge loss and I wanted to talk to him directly,” says Chancers.
So the streamer went through his hometown and knocked on Kwon’s door.
He also decided to share his potential confrontation with his followers and broadcast the incident to about 100 people who watched his AfreecaTV channel.
“I gave myself up”
The worst was yet to come. When the police were alerted, they arrested him .
Local media recorded the moment he arrived at the police station for questioning.
“I didn’t trespass on Do Kwon’s property. But according to the law in Korea, it’s illegal to go there just to talk. I didn’t know that,” says Chancers.
Chancers says he will almost certainly face a fine and be left with a criminal record that could make life difficult for him.
“It’s so hard,” he says. “I lost a lot of money and now I am being investigated by the police. At first I was a public official in Korea, but if I am found guilty in this trial, I may not be able to return to public service.”
“In Korean culture, it’s not the problem itself that matters, but the fact that it caused a scandal. I even had to publicly apologize as a sinner. I had no idea it would be this serious. It’s very sad.”
Chancers regrets trying to speak to Kwon directly but says crypto bosses are not being held accountable for the failed projects that affect so many people.
It is estimated that almost 250,000 people had invested in Terra coins .
Chancers accuses Kwon of not having communicated enough publicly during and since the coins crash. He now describes them as a “hoax”.
Kwon says that neither he nor his company have made any money from the drop in Terra coins.
On Friday, South Korean police said they were investigating his company, Terraforma Labs, and local media said the joint insurance and financial crimes investigation team was focusing on falling currencies.
Before starting Terra, in 2020, Kwon was reportedly behind another failed cryptocurrency, Basis Cash.
A week before Terra’s crash, he told a crypto YouTube channel: “95% [of coins] are going to die. But it’s also a source of entertainment to watch companies die .”
Just before his $60 billion brainchild began to implode, he wrote to his nearly one million Twitter followers: “I love chaos.”
Over the three days that followed, in a chain of messages on Twitter, he launched plan after plan to rescue the coins, calling on the Terra community to “be patient” and “stay strong.”
But on May 13, he conceded that the rescue plan had failed, writing on Twitter: “I am heartbroken for the pain my invention has brought to all of you.”
Now Kwon has hatched a controversial plan to resurrect the Terra Luna coin .
But well-known figures in the crypto community have criticized his strategy.
Changpeng Zhao, CEO of crypto exchange Binance, described Kwon’s plan as “wishful thinking.”
Billy Markus, co-founder of popular cryptocurrency dogecoin, was also scathing, writing on Twitter: “My recommendation is that they stop trying to bring in new victims to fund previous victims and leave the space forever.”
Neither Kwon nor Terraform Labs responded when requested to comment for this report.
- Joe Tidy
- BBC News cybersecurity reporter