Do Kwon Sentenced to 15 Years for Terra-Luna Fraud
Terraform Labs founder Do Kwon was sentenced to 15 years in prison by a New York federal court on Thursday. The court found him guilty of one of the biggest cryptocurrency frauds in history.
Kwon pleaded guilty in August to fraud linked to the $40 billion collapse of the Terra-Luna ecosystem in May 2022. This collapse caused a major crypto bear market that year.
Judge Criticizes Kwon’s Actions
US District Judge Paul Engelmayer gave Kwon a longer sentence than the 12 years prosecutors suggested. Kwon had asked for only 5 years.
The judge said, “You were not a kid. You were not somebody who didn’t know what was going on.” He called the Terra-Luna system a “house of cards” set to fail.
Engelmayer added, “Five years would be so implausible it would require appellate reversal […]. In the end, my assessment is that a prison sentence above 12 years is needed: 15 years.”
Kwon apologized in court, saying, “I am sorry to those who were hurt by my actions.” His apology came two years after the collapse and after he pled guilty.
Kwon Fled After Terra-Luna Collapse
The Terra-Luna project focused on the algorithmic stablecoin TerraUSD (UST) and its token LUNA. It collapsed when UST lost its peg to the US dollar in May 2022. This caused a market loss of about $40 billion in days.
Kwon assured investors the system was stable, even as problems appeared. After the collapse, he fled South Korea and went to Montenegro.
Montenegro police arrested Kwon in March 2023. He tried to board a flight to Dubai using a fake passport.
Following extradition disputes between the US and South Korea, Kwon was sent to New York to face charges.
This sentence comes after FTX founder Sam Bankman-Fried received 25 years in prison last year for fraud.
