Do Kwon gets 15-year prison term over TerraUSD crash
Do Kwon, the South Korean crypto entrepreneur behind the TerraUSD and Luna tokens, was sentenced on Thursday to 15 years in prison over what a US judge described as a vast fraud that devastated investors after the pair collapsed in 2022.
US District Judge Paul A. Engelmayer told a Manhattan federal court that Kwon had repeatedly misled everyday investors who believed his project could protect their savings, delivering a sharp rebuke as he imposed the 15-year term.
Kwon, 34, co-founded Singapore-based Terraform Labs and helped develop TerraUSD, promoted as a “stablecoin” meant to hold at $1 even during crypto market turbulence. He later pleaded guilty and admitted he had misrepresented key facts to investors, including how the token regained its peg after slipping below $1 in May 2021.
Prosecutors said Kwon claimed an algorithm known as the Terra Protocol restored the price. Instead, they alleged he arranged for a high-frequency trading firm to quietly purchase millions of dollars’ worth of the token to shore up its value.
Wearing prison clothing, Kwon apologised in court to those who lost money, acknowledging the scale of the damage described in letters submitted by victims. One of them, Ayyildiz Attila, told the court he lost between $400,000 and $500,000 and said years of savings and sacrifice had been wiped out.
After the sentencing, Kwon’s lawyer, Sean Hecker, said Kwon had spoken sincerely and would continue trying to make amends. Prosecutors, however, argued that Kwon used complex tactics to inflate the value of his cryptocurrencies and then tried to evade responsibility once the scheme unravelled.
The prosecution had sought at least 12 years in prison, saying the Terra crash caused billions of dollars in losses and helped spark broader turmoil across the crypto market. Kwon’s legal team asked for a sentence of no more than five years so he could return to South Korea to face criminal proceedings there.
Kwon was charged in January with nine criminal counts, including securities fraud, wire fraud, commodities fraud, and conspiracy to launder money. He later pleaded guilty in August to two counts — conspiracy to defraud and wire fraud — and admitted making false and misleading statements by failing to disclose the trading firm’s role in restoring TerraUSD’s peg.
Separately, Kwon agreed in 2024 to pay US$80 million as a civil fine and accept a ban on crypto transactions under a US$4.55 billion settlement involving the US Securities and Exchange Commission and Terraform.
Under his plea agreement, prosecutors will not oppose a potential request for him to be transferred abroad after he has served half of his US sentence.
Reuters
