- Trending
- Comments
- Latest
Do Kwon, the South Korean entrepreneur behind the Terra cryptocurrency collapse, was sentenced to 15 years in prison Thursday for what a federal judge called an “epic, generational” fraud.
U.S. District Judge Paul A. Engelmayer handed down the sentence during a hearing in Manhattan federal court, sharply rebuking Kwon for misleading investors who lost an estimated $40 billion when TerraUSD and Luna collapsed in 2022.
“This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr Kwon,” Engelmayer said.
Kwon, 34, dressed in yellow prison garb, apologized to victims.
“All of their stories were harrowing and reminded me again of the great losses that I’ve caused. I want to tell these victims that I am sorry,” he said.
The 15-year sentence exceeded the 12 years prosecutors had sought and was significantly higher than the five years Kwon’s lawyers requested. His legal team had argued for a shorter sentence so he could return to South Korea to face criminal charges there.
Kwon, who co-founded Singapore-based Terraform Labs, pleaded guilty in August to conspiracy to defraud and wire fraud. He admitted to misleading investors about TerraUSD, a so-called stablecoin designed to maintain a value of $1.
Prosecutors alleged that when TerraUSD slipped below its $1 peg in May 2021, Kwon told investors a computer algorithm known as “Terra Protocol” had restored the coin’s value.
Instead, Kwon arranged for a high-frequency trading firm to secretly buy millions of dollars of the token to artificially prop up its price, according to charging documents.
“I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg,” Kwon said during his guilty plea. “What I did was wrong.”
The court received hundreds of letters from victims describing how they lost their life savings. Prosecutors said the crash of Terra triggered a cascade of crises in the broader cryptocurrency market.
Kwon was charged in January with nine criminal counts including securities fraud, wire fraud, commodities fraud and money laundering conspiracy.
Kwon also faces charges in South Korea. As part of his plea deal, prosecutors will not oppose his potential application to be transferred abroad after serving half his U.S. sentence.
In 2024, Kwon agreed to pay $80 million as a civil fine and be banned from crypto transactions as part of a $4.55 billion settlement with the U.S. Securities and Exchange Commission.
