Do Kwon to be Sentenced for Crypto Fraud
NEW YORK, Dec 11 – Do Kwon, a cryptocurrency entrepreneur from South Korea, is set to be sentenced on Thursday in federal court in New York. He faces charges of fraud and conspiracy relating to two digital currencies that reportedly lost about $40 billion in 2022.
The 34-year-old co-founder of Terraform Labs, based in Singapore, had developed the TerraUSD and Luna currencies. Kwon had previously pleaded guilty and acknowledged that he misled investors regarding a coin that was supposed to remain stable during market fluctuations.
Kwon is among multiple crypto executives facing federal charges following a significant downturn in digital token prices last year, which led many firms to go bankrupt.
The sentencing will take place before U.S. District Judge Paul A. Engelmayer in Manhattan, starting at 11 a.m. local time.
Prosecutors are requesting at least 12 years in prison, arguing that Kwon’s actions significantly contributed to the turmoil in the cryptocurrency market and resulted in vast financial losses.
On the other hand, Kwon’s lawyer is advocating for a maximum sentence of five years, hoping to enable his client to return to South Korea to address additional criminal charges there.
In January, Kwon was indicted on nine counts, which include securities fraud and money laundering. He faced accusations in 2021 of misleading investors regarding TerraUSD, a so-called stablecoin intended to maintain a value of $1.
When TerraUSD dipped below its $1 target in May 2021, prosecutors claimed that Kwon misled investors by asserting that a computer algorithm had restored the coin’s value.
According to the indictment, Kwon covertly facilitated high-frequency trading firms to buy millions of dollars in tokens to artificially boost prices.
In August, Kwon pleaded guilty to conspiracy to defraud and wire fraud, expressing remorse for his actions in court. He stated that he failed to disclose the trading firm’s involvement in restoring the peg and admitted to making false statements about the reasons behind it. “What I did was wrong,” he acknowledged.
As part of a settlement with the U.S. Securities and Exchange Commission, Kwon agreed in 2024 to pay $80 million in civil penalties and to refrain from cryptocurrency trading, which forms part of a larger $4.55 billion settlement.
Kwon also faces legal challenges in South Korea. Prosecutors have indicated they will not oppose his potential request for deportation after he has served half of his sentence in the U.S.
