the staff of the Ridgewood blog
Ridgewood NJ, Cryptocurrency fugitive Kwon Do-Hyung, also known as Do Kwon, was reportedly arrested yesterday by officials in Montenegro as he attempted to travel through the capital city of Podgorica’s airport with falsified documents. His detention comes almost one year after the company he cofounded, Terraform Labs, collapsed, leading to the loss of billions of dollars in digital currency markets last year.
Among other products, Kwon’s company created a currency managed by an algorithm such that it maintained a one-to-one conversion with the US dollar . Last May, a number of large withdrawals of the coin sparked the equivalent of a bank run, leading to many investors attempting to reclaim and exchange the coin simultaneously. An estimated $45B of value in the coin was wiped out in one week, beginning months of upheaval across the cryptocurrency industry.
Do Kwon allegedly caused over $40 billion in losses due to the TerraUSD stablecoin collapse. TerraUSD, an algorithmic stablecoin, was not backed by reserves, rather an algorithm that eventually unwound, causing the stablecoin to ultimately fail. Kwon has been charged by the SEC for orchestrating cryptocurrency securities fraud and is sought by South Korean and Singaporean officials.
A stablecoin is a type of cryptocurrency that is designed to maintain a stable value relative to a particular asset or group of assets, such as fiat currencies like the US dollar or commodities like gold. Unlike other cryptocurrencies like Bitcoin, which are known for their high volatility and fluctuating prices, stablecoins are intended to provide a more stable store of value and can be used for a range of purposes, including payments, remittances, and as a hedge against market volatility.
There are several types of stablecoins, including fiat-backed stablecoins, which are backed by traditional fiat currencies like the US dollar or the euro, commodity-backed stablecoins, which are backed by physical commodities like gold or oil, and algorithmic stablecoins, which use complex algorithms to maintain a stable price.
Overall, stablecoins are seen as a useful tool for cryptocurrency users who want to minimize their exposure to market volatility while still enjoying the benefits of decentralized, blockchain-based transactions.
