Cryptocurrency mogul Do Kwon, 34, co-founder of Terraform Labs, was sentenced to 15 years in federal prison in Manhattan on Thursday after the collapse of his crypto ecosystem was revealed to be a massive fraud that wiped out over $40 billion in investor wealth.
Judge Paul A. Engelmayer delivered the sentence, calling it “a fraud on an epic, generational scale” and noted that Kwon had an “almost mystical hold” on investors, leading to incalculable “human wreckage.” Kwon faced a maximum sentence of 25 years.
The Scale of the Crime
The loss figure of $40 billion exceeds the combined losses from the high-profile frauds orchestrated by FTX founder Sam Bankman-Fried and OneCoin co-founder Karl Sebastian Greenwood. Prosecutors estimated that there may have been a million victims of Kwon’s scheme.
Kwon pleaded guilty in August to fraud charges stemming from the collapse of Terraform Labs, which had touted its TerraUSD as a reliable “stablecoin.” Prosecutors argued that this stability was an illusion, propped up by secret outside cash infusions, which plunged far below its $1 peg, triggering a cascade of crises across cryptocurrency markets.
Victims’ Testimony and Apology
During the day-long sentencing hearing, victims described the devastating toll the scam took on their lives, wiping out retirement savings and wrecking finances.
- One victim, speaking by telephone, explained that his wife divorced him, his sons had to skip college, and he had to move back to Croatia after the crash evaporated their family’s life savings.
- Another, Chauncey St. John, who lost savings and saw nonprofits he worked with lose over $2 million, stated, “I pray to God to have mercy on his soul.”
Kwon, who sat at the defense table in a yellow jail suit, apologized: “I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right.”
Judge Engelmayer rejected Kwon’s request to serve his sentence in his native South Korea, where he also faces prosecution. Kwon agreed to forfeit over $19 million as part of his plea deal and was credited for the 17 months he spent in jail in Montenegro, where he was arrested in March 2023 while attempting to flee on a false passport.
Source: CNN
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