Crypto bros need to stop proving Jamie Dimon right

 

Do Kwon is not on the run. We know that because the cryptocurrency founder said so. Singapore authorities announced that he’s no longer in their country, a South Korean court issued a warrant for his arrest, and Interpol put out a Red Notice. But that doesn’t mean he’s ready to reveal his whereabouts, or his legal strategy to fight the charges.
Kwon’s outfit is called Terraform Labs. It’s one of dozens of blockchain startups built to reinvent the global financial system and challenge the fiat-based structure which has central banks at its core. Its spin on the theme was to build a stablecoin on top of its Terra blockchain.
Instead of being backed by holdings of a fiat currency like the more-famous Tether — which claims to hold one US dollar for each Tether minted — TerraUSD “achieves price-stability via an elastic money supply.” In its White Paper, the stablecoin’s instigators note that the extreme volatility of Bitcoin’s price is Terra’s raison d’etre.
There’s just one, slight, $60 billion problem. The algorithm didn’t work. The peg didn’t hold. TerraUSD’s price collapsed, as did that of the associated Luna token. And holders of these tokens got wiped out.
That was in May, and now Kwon is on the lam. Except, he says he’s not. And he also says it’s nobody’s business where he is, unless you’re a friend, plan to meet, or are playing a location-based game (that last one is a joke, we think).
Running a bad business isn’t against the law. Losing $60 billion of customers’ money in itself is also not a crime. But authorities in Seoul are convinced he did something wrong, and seek to charge Kwon and five others for breaches of capital markets laws.
Having failed to get him to front up, South Korea went one further and asked Interpol to help, which they did, requesting “law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action.” This international game of cat and mouse isn’t a good look for Kwon, or crypto executives anywhere.
For more than a decade, proponents have fought to shake off cryptocurrency’s image as a frontier for criminals, digital blackmailers, drug lords and international arms smugglers. Yet every time the head of a cryptocurrency outfit — legitimate or not — drags their feet on explaining what happened to their collapsed business, or fails to outline a legal defense to any criminal charges, they’re giving fodder to the naysayers.
“They are decentralized Ponzi schemes,” Jamie Dimon, chief executive officer of JPMorgan Chase & Co., told Congress last week. It’s not helpful to Kwon’s cause, or that of cryptocurrencies more broadly, that his refusal to give his whereabouts comes just as a poster child for the old-school, central-bank run fiat system points fingers at an entire industry.
To be fair to Kwon, he’s not alone. Numerous other trailblazers have faced allegations and prosecution. Some were outright scoundrels, some sailed too close to the wind, and others were victims of regulators’ inability to keep up with changing times. And it remains an ongoing debate which of these categories some of the more high-profile cases belong.
—Bloomberg

Leave a Reply

Send this to a friend