In the cryptocurrency world, stablecoins like USDC and UST are meant to have a fixed value of one U.S. dollar, and a corresponding verifiable backing of some form. That was not the case for the UST token from the Terra project, which crashed in 2022 (no relation to USDT aka Tether). Do Kwon, the project's South Korean leader, was sentenced to 15 years in prison in the aftermath of a scheme that caused an estimated $40 to $60 billion in damages to investors.
The U.S. Department of Justice charged Kwon on nine counts, including securities fraud, wire fraud, commodities fraud, and money laundering. The charges stem from the fact that, despite Kwon's promises and maneuvers, UST, as designed, was neither properly backed nor sustainable. According to the CNBC report, Kwon pleaded guilty to misleading investors about the actual stability of the stablecoin during high-volatility periods in the crypto market.
