NEW YORK (AP) — Cryptocurrency mogul Do Kwon is scheduled 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 cryptocurrency king,” pleaded guilty in Manhattan federal court in August to fraud charges stemming from Terraform Labs’ $40 billion crash.
The company had touted its TerraUSD as a reliable “stablecoin” — a kind of currency typically pegged to stable assets to prevent drastic fluctuations in prices. But prosecutors say it was all an illusion that came crumbling down, devastating investors and triggering “a cascade of crises that swept through cryptocurrency markets.”
Kwon, who hails from South Korea, has agreed to forfeit over $19 million as part of the plea deal.
While federal sentencing guidelines would recommend a prison term of about 25 years, prosecutors have 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 purported business,” prosecutors wrote in a recent memo to the judge. “His rampant lies left a trail of financial destruction in their wake.”
Kwon’s attorneys asked that the sentence not exceed five years, arguing in their own memo that his conduct stemmed not from greed, but hubris and desperation.
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In a letter to the judge, Kwon wrote, “I alone am responsible for everyone’s pain. The community looked to me to know the path, and I in my hubris led them astray,” while adding, “I made misrepresentations that came from a brashness that is now a source of deep regret.”
Authorities said investors worldwide lost money in the downfall of the Singapore crypto firm, which Kwon co-founded in 2018. Around $40 billion in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its $1 peg.
Kwon was extradited to the U.S. from Montenegro after his March 23, 2023, arrest while traveling on a false passport in Europe.
