Crypto mogul Do Kwon sentenced to 15 years in prison for fraud
Do Kwon, the entrepreneur behind two cryptocurrencies that lost $40bn (£29.8bn) three years ago and caused the sector to crash, has been sentenced to 15 years in prison for fraud.The South Korean, 34, had pleaded guilty to two counts of US charges of conspiracy to defraud and wire fraud.Kwon, who co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna currencies, was sentenced at a hearing in New York.The US district judge Paul Engelmayer called his crimes “a fraud of epic generational scale”.
The judge imposed a longer sentence than the 12 years sought by prosecutors, saying it would be too lenient given the harm he had caused to victims.“In the history of federal prosecutions very few cases have caused more monetary harm than you did,” he said.The US government had argued that Kwon’s fraudulent actions and treatment of customers had contributed to the “crypto winter” of 2022, and the failure of Sam Bankman-Fried’s FTX.“I don’t argue nor will I ever argue that my conduct was industry standard and market practice,” Kwon said.“If they were, they were bad industry standards and market practices and I as one of the market leaders should be personally responsible.
The blame should be pointed at me for everyone’s suffering.“I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right.”Kwon’s lawyers had argued that he should be sentenced to no more than five years in prison, arguing that his actions were motivated by a desire to prop up Terraform’s TerraUSD stablecoin, not personal gain.The judge called the request “wildly unreasonable”.Kwon has been in US custody since his extradition from Montenegro last year, where he was imprisoned for using a fake passport.
As part of his guilty plea, Kwon agreed to forfeit $19.3m and some properties that prosecutors claimed he gained from the fraud.Prosecutors said they would support Kwon serving the second half of his sentence in South Korea, where he still faces charges, if he abides by the terms of his plea deal.Prosecutors said they would not seek restitution for the investors who lost a total of $40bn, saying the prospect of determining each of their losses would be too complex.The judge said that some of Kwon’s investors still believed in him, even after his guilty plea, and that reading some of their letters was like “reading the words of cult followers”.
Engelmayer said he had received letters from 315 victims all over the world, many reporting they had lost their homes, retirement savings, money for medical expenses and college funds to Kwon’s fraud.A graduate of Stanford University, Kwon returned to South Korea and launched the startup that would become Terraform Labs in 2017 with the co-founder Daniel Shin.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, they said, he arranged for a high-frequency trading company to buy millions of dollars of the token secretly to artificially prop up its price.Prosecutors said that false claim, and others, drove retail and institutional investors to buy Terraform products and boost the value of Luna – a more traditional token that fluctuated in value but was closely linked to TerraUSD – to $50bn by the spring of 2022.
Kwon is one of several cryptocurrency moguls to face federal charges after a slump in digital token prices in 2022 prompted the collapse of a number of companies.Bankman-Fried, the founder of the US’s largest crypto exchange, was sentenced to 25 years in prison in 2024.
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