Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that collapsed in 2022, wiping out an estimated $40 billion, has been sentenced to 15 years in prison for what a judge described as an “epic fraud.”
US District Judge Paul A. Engelmayer handed down the sentence on Thursday, December 11, in Manhattan federal court, condemning Kwon for deceiving everyday investors who had trusted him with their savings.
“This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon,” Engelmayer said.
Kwon, 34, co-founded Singapore-based Terraform Labs and created the TerraUSD and Luna cryptocurrencies. He pleaded guilty to misleading investors about a coin that was supposed to maintain a stable value during market fluctuations.
He is among several cryptocurrency figures facing federal charges following the 2022 crash, which led to the collapse of multiple crypto firms.
Wearing yellow prison attire, Kwon apologized to victims, including hundreds who submitted letters detailing their losses.
“All of their stories were harrowing and reminded me of the great losses I’ve caused. I want to tell these victims that I am sorry,” he told the court.
Victims reported that the collapse destroyed savings, wiped out retirement funds, and harmed charitable organizations. One victim said he had contemplated suicide after his father lost his retirement money in the scheme.
Judge Engelmayer rejected the government’s recommended 12-year sentence as “unreasonably lenient” and the defence’s request for five years as “utterly unthinkable and wildly unreasonable.” Kwon had faced a maximum of 25 years.
“Your offence caused real people to lose 40 billion dollars in real money, not some paper loss,” the judge said, adding that Kwon had an “almost mystical hold” over investors, making this “a fraud on an epic, generational scale.”
Prosecutors noted that losses from Terraform Labs’ collapse exceeded those from the frauds involving FTX founder Sam Bankman-Fried and OneCoin co-founder Karl Sebastian Greenwood combined. The judge estimated that up to a million people may have been affected.
Under his plea deal, Kwon agreed to forfeit more than $19 million. His lawyers argued that his actions stemmed from hubris and desperation rather than greed.
Judge Engelmayer denied Kwon’s request to serve his sentence in South Korea, where he also faces ongoing legal proceedings.
