Do Kwon Sentenced to 15 Years in Prison for Terraform Labs Fraud
Do Kwon, co-founder of Terraform Labs based in Singapore, has pled guilty to two US charges of conspiracy to defraud and wire fraud related to the collapse of the cryptocurrency TerraUSD (UST) and Luna. The collapse, which occurred in May 2021, led to approximately $40 billion in losses and significantly contributed to the 2022 cryptocurrency market downturn.
Kwon was sentenced to 15 years in prison by US District Judge Paul Engelmayer in New York, surpassing the prosecutors' request of a 12-year sentence. The judge described the fraud as one of epic generational scale with substantial harm inflicted on the victims. Kwon had been extradited from Montenegro after imprisonment for using a fake passport and has been in US custody since last year.
As part of his plea agreement, Kwon agreed to forfeit $19.3 million along with certain properties obtained through the fraudulent activities. Prosecutors indicated they will support him serving the second half of his sentence in South Korea, where Kwon still faces charges. Restitution for investors will not be sought due to the complexity involved.
During the proceedings, letters from 315 victims were submitted to the judge. Some investors remained supportive of Kwon, described during the sentencing as exhibiting cult-like loyalty. Prosecutors allege Kwon employed a high-frequency trading firm to artificially prop up TerraUSD and Luna, misleading investors and driving Luna's valuation to approximately $50 billion by 2021.
