Do Kwon Sentenced to 15 Years for Cryptocurrency Fraud

Do Kwon, the South Korean crypto entrepreneur behind two digital currencies that lost around $40 billion in 2022, was sentenced to 15 years in a New York federal court for fraud and conspiracy. This sentencing took place on Thursday.

Kwon, aged 34 and co-founder of Terraform Labs, based in Singapore, developed TerraUSD and Luna. He previously admitted guilt, acknowledging that he misled investors about a stablecoin meant to maintain a consistent price amidst market volatility.

Following a significant decline in digital token values last year, Kwon was among several cryptocurrency figures facing federal charges. U.S. District Judge Paul A. Engelmayer delivered the sentence during a hearing in Manhattan.

Prosecutors had recommended at least a 12-year prison term, asserting that Kwon’s actions led to billions lost and triggered multiple crises in the crypto sector. On the other hand, Kwon’s attorney argued for a maximum of five years, suggesting he should return to South Korea to deal with local charges.

In January, Kwon faced nine counts, including securities fraud, wire fraud, commodity fraud, and conspiracy to commit money laundering.

Back in 2021, he was accused of misleading investors regarding TerraUSD, a stablecoin that was supposed to hold a value of $1. When it plummeted below this mark in May 2021, Kwon reassured investors that a computer algorithm, referred to as the Terra Protocol, had helped restore its value.

However, investigations revealed that Kwon had secretly coordinated with high-frequency trading firms to buy significant amounts of tokens to inflate their prices. In August, he pleaded guilty to conspiracy to defraud and wire fraud, and he expressed remorse during court proceedings.

Kwon admitted, “I didn’t reveal the trading company’s involvement in restoring the peg, and I made misleading statements about how the peg was reinstated. I was wrong.”

In a separate agreement, he consented to pay $80 million in civil penalties and to be barred from cryptocurrency trading, as part of a larger $4.55 billion settlement with the Securities and Exchange Commission.

Additionally, Kwon faces charges in South Korea. According to his plea agreement, prosecutors won’t contest any requests for extradition he may make after serving half of his U.S. sentence.