In May 2022, TerraUSD and Luna lost their pegs to the US dollar, causing their values to plummet close to zero. Investors filed lawsuits alleging that Terraform and Kwon were operating a Ponzi scheme, and the freefall contributed to the collapse of the crypto hedge firm Three Arrows Capital. Binance, the cryptocurrency exchange, was also sued for allegedly improperly promoting TerraUSD as a secure asset. Although Kwon claimed he was not trying to evade arrest, he fled his home in South Korea, refused to answer investigators’ questions, and was subsequently placed on Interpol’s “red notice” list.
