A New York court has sentenced former cryptocurrency entrepreneur Do Kwon to 15 years in prison for his role in the collapse of two digital currencies that wiped out an estimated $40 billion in investor value.
Kwon, a South Korean national and co-founder of Singapore-based Terraform Labs, admitted to misleading investors about TerraUSD, a supposed “stablecoin” designed to hold its value against the US dollar. TerraUSD and its sister token, Luna, imploded in 2022, contributing to a wider market crash that triggered the failure of several crypto firms.
US District Judge Paul A. Engelmayer said Kwon, a Stanford graduate, repeatedly deceived investors who entrusted him with their funds.
“This was a fraud on an epic, generational scale,” the judge said, adding that few financial crimes had caused comparable harm.
Kwon, who pleaded guilty in August to conspiracy to defraud and wire fraud, told the court he regretted his actions.
“I have spent almost every waking moment of the last few years thinking about what I could have done differently,” he said.
Prosecutors said that when TerraUSD slipped below its $1 peg in May 2021, Kwon publicly claimed a computer algorithm had restored the coin’s value. In reality, he had arranged for a trading firm to secretly purchase millions of dollars of TerraUSD to prop up its price, according to court filings.
The case is one of several high-profile crypto prosecutions in the US following the sector’s dramatic downturn in 2022.
