In the US, Do Kwon, who is considered to be one of the main reasons for the crypto market collapse in May 2022, was sentenced to 15 years in prison, even more than prosecutors asked for, for his role in “a $40 billion worldwide fraud.”
District Judge Paul Engelmeyer of the Southern District of New York (SDNY) said that “15 years is the least I can impose,” according to Inner City Press reporting from the courtroom.
Kwon, 34, will be able to serve the second half of his sentence in South Korea, where he also faces additional charges.
Prosecutors were seeking a 12-year sentence, while Kwon, who had pleaded guilty earlier this year, attempted to convince the judge to sentence him to five years.
According to the report from the courtroom, the judge said that Kwon was “an icon in the crypto world,” but due to his actions, “the death spiral took down” hundreds of thousands of investors in 2022.
Do Kwon was the founder of Terraform Labs, the company behind the crypto projects the Terra USD stablecoin and the Luna token, both of which collapsed in 2022, taking down multiple companies in the industry and contributing to the collapse of the multibillion-dollar crypto exchange FTX in November of the same year. FTX’s founder, Sam Bankman-Fried, was also accused of fraud and sentenced to 25 years in prison in 2024 in the US.
The judge was quoted as saying that this was an “unusually serious fraud” and that Kwon lied to the market for four years that Terra USD was a stablecoin, and when its peg failed, Kwon “chose to lie” and pretend that the peg had held.
Kwon is also known for his infamous phrase, now turned into a meme, “deploying capital, steady lads,” during the Terra crisis.
Judge Engelmeyer also quoted letters from victims of the collapse, claiming that, in some instances, their portfolios went down from $400,000 to $20,000, believing that this was a low-risk investment that was even promoted by other high-profile crypto industry players, including billionaire Mike Novogratz.
“What makes what you did so despicable is that you traded on trust,” the judge concluded.
Meanwhile, the LUNA token is still being traded after rebranding to Terra Luna Classic. It is down 24% in a day, trimming its monthly gains to 31%. However, the price is down almost 100% since its all-time high in April 2022.
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