Former cryptocurrency entrepreneur Kwon Do-hyung, commonly known as Do Kwon, has been sentenced to 15 years in a US prison as a judge reprimanded him for “epic” fraud.
Kwon, 34, was the creator of the Luna crypto token and the accompanying TerraUSD stablecoin, both of which lost most of their value almost overnight in May 2022, leading to a number of crypto failures over the following weeks and months.
The $40 billion (£30bn) collapse led to heavy losses by ordinary consumer investors around the world.
Crypto collapse
Meanwhile Kwon fled South Korea, spending time in Serbia until he was arrested in Montenegro in March 2023, attempting to board a flight to Dubai using a false passport.
He spent nearly two years in a Montenegro prison before being extradited to the US, where he pleaded guilty and admitted to misleading investors about the offerings of his Singapore-based company Terraform Labs.
Prosecutors had recommended a 12-year sentence, but Judge Paul Engelmayer of the Southern District of New York said he decided to go over the recommendation because Kwon’s crimes amounted to “fraud on an epic, generational scale”.
Sam Bankman-Fried, whose FTX crypto exchange also collapsed in 2022, was last year sentenced to 25 years in prison.
On Thursday, Kwon was escorted into the New York federal courtroom in shackles, where the judge heard from victims who suffered from the collapse of Terraform Labs.
Financial losses, homelessness
Those included a woman in the Republic of Georgia who said over the phone through a Russian interpreter that she had invested the value of her home in Luna, lost everything and became homeless in the streets of Tbilisi.
In a statement to the court, Kwon said: “Blame should be pointed at me for everyone’s suffering.”
Kwon was known for a brash, arrogant public persona, taunting critics with remarks such as, “I don’t debate the poor.”
“Looking back, I cannot comprehend my own hubris, and wish I had not silenced the warnings,” said Kwon in a letter to the court in November.
South Korean charges
Kwon’s lawyers had argued for a shorter sentence so that he could be sent back to South Korea to face criminal charges there.
As part of a plea deal, prosecutors will not oppose Kwon’s potential application to be transferred abroad after serving half his US sentence.
