Crypto mogul Do Kwon to be sentenced for misleading investors who lost billions
NEW YORK– Cryptocurrency tycoon Do Kwon is expected to be sentenced Thursday for misleading investors who lost billions when his company’s crypto ecosystem collapsed in 2022.
Kwon, known by some as “the king of cryptocurrency,” pleaded guilty in Manhattan federal court in August to fraud charges stemming from the $40 billion crash of Terraform Labs.
The company had presented its TerraUSD as a reliable “stablecoin” – a kind of currency usually tied to stable assets to avoid drastic price fluctuations. But prosecutors say it was just an illusion that collapsed, devastating investors and triggering “a cascade of crises that swept cryptocurrency markets.”
Kwon, a native of South Korea, agreed to forfeit more than $19 million as part of the plea deal.
While federal sentencing guidelines recommend a prison term of about 25 years, prosecutors asked the court to sentence Kwon to 12 years. They cited his guilty plea, the fact that he faces further prosecution in Korea and that he has already served time in Montenegro while awaiting extradition.
“Kwon’s fraud was colossal in scope, permeating virtually every facet of Terraform’s alleged activities,” prosecutors wrote in a recent memo to the judge. “His rampant lies have left a trail of financial destruction in their wake.”
Kwon’s lawyers asked that the sentence not exceed five years, arguing in their own brief that his conduct stemmed not from greed, but from hubris and desperation.
In a letter to the judge, Kwon wrote, “I am solely responsible for everyone’s pain. The community looked to me for guidance, and in my pride I led them astray,” while adding, “I made false statements that came from an impertinence that is now a source of deep regret.”
Authorities said investors around the world lost money in the downfall of the Singapore crypto firm, co-founded by Kwon in 2018. About $40 billion in market value was wiped out for holders of TerraUSD and its floating sister coin, Luna, after the stablecoin plunged well below its $1 peg.
Kwon was extradited to the United States from Montenegro after his arrest on March 23, 2023, while traveling in Europe on a false passport.
