Crypto Founder Sentenced to 15 Years Over $40bn Stablecoin Collapse
A New York court has sentenced disgraced cryptocurrency entrepreneur Do Kwon to 15 years in prison for his role in the dramatic collapse of two digital assets that wiped out an estimated $40bn (£29.9bn) in value.
Kwon, a South Korean national and co-founder of Singapore-based Terraform Labs, helped create the TerraUSD and Luna tokens, whose implosion in 2022 shook global crypto markets and contributed to a wave of industry bankruptcies. He earlier admitted that he misled investors about the stability and mechanism of TerraUSD, a so-called stablecoin marketed as maintaining a steady value against the US dollar.
US District Judge Paul A. Engelmayer, delivering the sentence in Manhattan on Thursday, said Kwon’s deception left extraordinary damage in its wake.
“This was a fraud on an epic, generational scale,” the judge said. “In the history of federal prosecutions, few schemes have caused as much harm.”
Kwon, a Stanford graduate, pleaded guilty in August to conspiracy to defraud and wire fraud. Speaking in court, he expressed regret for the devastation caused to investors.
“I have spent almost every waking moment of the last few years thinking of what I could have done differently and what I can do now to make things right,” he told the judge.
According to prosecutors, when TerraUSD slipped below its $1 peg in May 2021, Kwon assured backers that its algorithm had corrected the problem. In reality, court filings show he arranged for a trading firm to secretly purchase large amounts of the token to artificially restore its price.
Kwon is among several high-profile crypto executives prosecuted in the US following the sector’s sharp downturn in 2022.
