$11M LUNC Bet 1 Year Later: Do Kwon Wanted, Funds Paid, Hedge Stays at FTX
Former Terra Luna co-founder Do Kwon lost $11 million in two bets and is currently wanted by Interpol and is said to be hiding in Serbia.
About a year ago, on March 14, 2022, cryptocurrency trader GiganticRebirth (GCR) invited Do Kwon, co-founder and then-CEO of Terraform Labs, to bet $10 million that in a year the price of Terra Luna (LUNC) would reach a price lower than the then-current price of $92.4 per token.
The blockchain executive accepted the second offer in the series. The day before, cryptocurrency trader Algod offered a $1 million bet that LUNC would be below $88 per token on March 13, 2023, which Kwon also accepted. This resulted in two bets worth $11 million and a $22 million prize pool.
The $22 million was held in escrow by blockchain celebrity Cobie on his Ethereum address. Cobie claimed at the time that “I provided a hot wallet for the participants on my phone while I was in the middle of Africa, and when I woke up, $22 million was deposited.”
“I don’t want to use 22m on a mobile tent when I live in a tent with lions lmao.”
As Cobie said and confirmed by blockchain data, blockchain figures paid out stakes from hot wallets in April 2022, shortly after the $40 billion LUNC and accompanying algorithmic stablecoin Terra USD (USTC) ecosystem collapsed, with LUNC trading at decimal points close to zero. However, Cobie also said in December 2022:
“I actually paid my bet shortly after Luna hit 0, and then bought enough Luna to hedge in case it somehow went back to $88. But I lost my hedge (custodied in FTX), so if Luna goes to $88 in the next 3 months, I’m screwed”
Since the stake runs until mid-March 2023, Cobie will still need to hold the collateral despite LUNC’s collapse, as the funds were paid out in advance and the conditions may be different at the time of settlement. At the time of publishing, LUNC is trading at $0.000124 per token.
Last November, FTX, then the world's third-largest cryptocurrency exchange by trading volume, filed for bankruptcy over allegations of misappropriation of user funds and froze the deposits of more than 1 million creditors. On April 4, 2022, Cobie transferred the prize and principal, $22 million worth of stablecoins, to the winners GCR and Algod through FTX. The subsequent flow of funds is unknown.
On September 26, 2022, Interpol issued a red notice for Do Kwon on fraud charges related to the Terra Luna collapse at the request of South Korean prosecutors. The former blockchain executive is reportedly hiding in Serbia, a country with which South Korea does not have an extradition agreement. The FBI and the Department of Justice reportedly began investigating the Terra Luna collapse on March 14, 2023. A month prior to this, the U.S. Securities and Exchange Commission charged Terraform Labs and former CEO Do Kwon with "deceiving investors in a crypto scheme."
