Do Kwon, the creator of TerraUSD, received a 15-year sentence for “epic” $40 billion cryptocurrency fraud
Do Kwon is imprisoned by a US judge for major cryptocurrency fraud, claiming that investors suffered historic financial losses as a result of the TerraUSD crash.
Following the collapse of the TerraUSD and Luna cryptocurrencies in 2022, which caused an estimated $40 billion to be lost, Do Kwon, a co-founder of Terraform Labs, was sentenced to 15 years in jail for what a US federal judge called one of the most catastrophic financial scams in modern history.
During his sentencing hearing in Manhattan on Thursday, US District Judge Paul A. Engelmayer blasted Kwon for misleading regular investors who entrusted him with their money.
The judge declared, “This was a fraud on an epic, generational scale.” “Mr. Kwon, few federal cases have harmed people as much as you have.”
Kwon, 34, admitted to deceiving investors about TerraUSD, a stablecoin that is touted to stay at $1 even during market turbulence, and entered a guilty plea to conspiracy to defraud and wire fraud. According to the prosecution, Kwon hid the involvement of a high-frequency trading company that he covertly assigned to support the coin’s value when it fell below its peg.
Wearing yellow prison attire, Kwon expressed regret to the victims, many of whom penned heartfelt letters describing their financial ruin.
“I want to tell these victims that I am sorry; all of their stories were terrifying,” he remarked.
Ayyildiz Attila, one of the victims, claimed to have lost between $400,000 and $500,000, calling the fall “years of sacrifice erased.”
The prosecution argued that Kwon’s plan set off a series of events that caused the cryptocurrency market to become unstable and called for a minimum 12-year sentence. In order to allow him to eventually return to South Korea to face similar charges, his attorneys asked for no more than five years.
According to US Attorney Jay Clayton, Kwon tried to avoid responsibility after the system broke and used “elaborate schemes” to manipulate cryptocurrency values.
As part of a larger $4.55 billion settlement with the US Securities and Exchange Commission, Kwon previously consented to pay a $80 million civil fine and accept a ban from cryptocurrency activities. In South Korea, he is also subject to criminal prosecution.
Prosecutors will not object to his possible transfer overseas once he completes half of his sentence in the United States under the terms of his plea deal.
