Do Kwon Sentenced to 15 Years for Cryptocurrency Fraud
Do Kwon, the South Korean crypto entrepreneur behind two digital currencies that collectively lost around $40 billion in 2022, was sentenced to 15 years in prison. This verdict was delivered by U.S. District Judge Paul A. Engelmayer, who described Kwon’s actions as an “epic fraud.”
During the sentencing, the judge criticized Kwon for misleading ordinary investors who had entrusted him with their life savings. Engelmayer remarked, “This was an epic, generational fraud. Mr. Kwon, few frauds in federal prosecution have been as damaging as yours.”
At 34 years old, Kwon is the co-founder of Singapore’s Terraform Labs, responsible for the failed TerraUSD and Luna currencies. He had previously admitted to misleading investors about a coin meant to maintain stability amidst the volatile crypto market.
His case is part of a broader trend, with several crypto executives facing federal charges following the significant drop in digital token prices in 2022 that led to many firms declaring bankruptcy.
Wearing a yellow prison uniform, Kwon addressed the court to apologize to those affected, acknowledging the hundreds of victims who have shared their stories of loss. “All of their stories are tragic and remind me of the tremendous loss I have caused. I want to say to the victims that I am sorry,” he said.
One victim, Ayildis Attila, shared that he lost between $400,000 and $500,000 in the collapse, stating, “My savings, my future, and the results of years of sacrifice disappeared.” He described the struggle to manage his responsibilities as everything he had worked for vanished.
Kwon’s attorney, Sean Hecker, suggested that Kwon expressed genuine remorse and would be actively seeking redemption, while Manhattan U.S. Attorney Jay Clayton described Kwon’s actions as part of a deliberate scheme to inflate cryptocurrency values and evade accountability when things went wrong.
The prosecution asked for a sentence of at least 12 years, citing the billions lost due to Kwon’s actions and the subsequent crises in the crypto market. Kwon’s legal team, on the other hand, sought a lighter sentence of five years, hoping he could return to South Korea to face local charges.
Kwon faced nine criminal counts, including securities fraud and conspiracy to commit wire fraud. He was accused of deceiving investors regarding TerraUSD, which was intended to maintain a value of $1. Prosecutors argued that when it fell below this peg in May 2021, he falsely claimed that a computer algorithm, known as the Terra Protocol, had restored its value.
Instead, he allegedly orchestrated a scheme where trading firms purchased millions of dollars in tokens to artificially boost prices. Kwon ultimately pleaded guilty to two counts of conspiracy and wire fraud and expressed regret in court for failing to reveal the trading company’s involvement in attempts to restore the coin’s value. He acknowledged, “What I did was wrong.”
In 2024, Kwon agreed to a settlement with the U.S. Securities and Exchange Commission, paying $80 million in civil penalties and being barred from cryptocurrency trading. He also faces charges in South Korea, but as part of his plea deal, the prosecution will not oppose a request for extradition after Kwon serves half of his sentence in the U.S.
