Do Kwon Pleads Guilty to Fraud Charges Following Crypto Collapse
NEW YORK – South Korean cryptocurrency figure Do Kwon admitted guilt on Tuesday to two counts of fraud linked to the $40 billion downfall of a cryptocurrency ecosystem that assured investors their funds were secure.
Kwon, aged 33 and often referred to as the “Cryptocurrency King,” entered his plea in a Manhattan federal court.
In a judicial agreement between Kwon and the prosecutors, the government indicated it wouldn’t pursue a sentence exceeding 12 years, provided Kwon adheres to the terms of the agreement. This is notably less than the federal sentencing guidelines, which suggest a sentence closer to 25 years. The sentencing is scheduled for December 11.
Authorities have noted that investors globally were affected by the collapse tied to Terraform Labs, a Singapore-based crypto company co-founded by Kwon in 2018. The downfall occurred after the company’s Terrausd, a so-called “Stablecoin,” was promoted as a reliable financial instrument.
Terrausd was meant to be stable, pegged to assets like the dollar to avoid sharp price fluctuations. Unfortunately, the market value of Terrausd and its associated cryptocurrency Luna had effectively vaporized, resulting in approximately $40 billion in losses.
Kwon was arrested in Montenegro on March 23, 2023, while attempting to travel from the country with a counterfeit European passport. He was taken into custody on December 31.
Through his plea deal, which includes charges of commodity fraud, securities fraud, and conspiracy, Kwon has agreed to forfeit over $19 million and relinquish his stake in Terraform Labs and its cryptocurrencies.
His attorney, Sean Hecker, commented that this plea indicates Kwon’s acknowledgment of misleading investors. Hecker stated that Kwon was accepting responsibility for his actions regarding the Terra community.
The U.S. attorney Jay Clayton remarked that Kwon “exploited technical assurances and investor enthusiasm surrounding cryptocurrency” to execute what could be one of the largest scams in history. He pointed out that billions of dollars were lost by investors worldwide.
