Disgraced Terra creator and onetime fugitive Do Kwon was sentenced to 15 years behind bars on Thursday for his role in a massive fraud that saw about $40 billion wiped from the crypto ecosystem over the course of just three days three years ago.
Do Kwon Gets 15 Years
According to reporting from Inner City Press, Do Kwon received a 15-year prison sentence on Thursday.
The sentence, handed down by District Judge Paul Engelmeyer of the Southern District of New York (SDNY), slightly surpassed the 12-year sentence prosecutors had requested earlier and is much greater than the five-year sentence proposed by Kwon’s lawyers.
Judge Engelmeyer stated that he took into consideration the “eye-popping” extent of Kwon’s fraud, in terms of both the money lost and the sheer number of victims, as well as the fact that he attempted to flee from the law, escaping at first to Serbia, then Montenegro, on forged travel documents before getting arrested en route to Dubai.
The 33-year-old South Korean national, who pleaded guilty to a series of fraud charges in August, committed an “unusually serious” fraud, Engelmayer said, adding:
“For four years you publicly lied to the market […] The investors were taking a risk, caveat emptor. But they were not taking the risk of being a fraud victim… What makes what you did so despicable is that you traded on trust.”
Kwon must serve seven and a half years before he can apply for a transfer to South Korea, where he may complete the second half of his US sentence. He faces up to 40 years in prison in his home country, South Korea.
Prior to delivering Kwon’s punishment, Engelmayer heard from some of Terraform’s victims about how the implosion of Terra’s ecosystem impacted their lives.
Kwon’s requested sentence of five years, the judge noted, was “utterly unthinkable and wildly unreasonable,” adding that it was “so implausible that, if imposed, it would require appellate reversal.” Even the 12-year recommendation US prosecutors had requested, he said, was not enough to deter either Kwon himself or “future Do Kwons” from committing similar frauds.
The Timeline Of Kwon’s Legal Saga
The unravelling of Terraform’s TerraUSD (UST) algorithmic stablecoin and its sister token LUNA was an industry-shaking moment in May 2022, which spurred a contagion event that culminated in the bankruptcy of Sam Bankman-Fried’s once-mighty FTX months later. Rather than being backed by liquid assets, Terra’s UST stablecoin relied on market incentives via algorithms to maintain a 1:1 peg to the US Dollar — but it ultimately failed.
Kwon was criminally charged in March 2023 with conspiracy to commit fraud, commodities fraud, wire fraud, securities fraud, conspiracy to commit fraud, and engaging in a conspiracy to commit market manipulation and money laundering. In August, Kwon pleaded guilty to one count of conspiring to commit commodities fraud, securities fraud, and wire fraud, and one count of committing wire fraud.
Kwon expressed remorse while addressing the court during his sentencing hearing.
“The blame should be pointed at me,” Kwon said. “I failed to operate the system in the right way. I have spent almost every waking moment of the last few years thinking of what I should have done differently, and what I can do now to make this right.”
Source: https://zycrypto.com/fallen-crypto-mogul-do-kwon-sentenced-to-15-years-in-prison-for-colossal-40b-terra-luna-fraud/
