A New York judge has sentenced a former crypto entrepreneur to 15 years in prison after he caused two digital currencies to collapse, wiping out an estimated US$40bn, and described the case as an “epic” fraud.
Do Kwon, a South Korean national, co-founded the Singapore-based Terraform Labs, the company behind the TerraUSD and Luna digital coins.
He admitted misleading investors about TerraUSD, a so-called stablecoin designed to maintain parity with the US dollar.
According to the BBC, Kwon was among several crypto executives charged in the US after digital tokens plunged in 2022, triggering the collapse of multiple firms.
US District Judge Paul A Engelmayer said the Stanford graduate had repeatedly lied to investors who trusted him with their funds.
“This was a fraud on an epic, generational scale,”
he told the Manhattan court. “
In the history of federal prosecutions, there are few frauds that have caused as much harm as you have.”
Kwon, who pleaded guilty in August to conspiracy to defraud and wire fraud, expressed remorse during the hearing.
“I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right,”
he said.
Prosecutors said that when TerraUSD slipped below its US$1 peg in May 2021, Kwon falsely assured investors that an algorithm had restored its value.
In reality, court documents state that he arranged for a trading firm to secretly purchase millions of dollars’ worth of the coin to artificially inflate its price.
Featured image credit: Edited by Fintech News Singapore, based on image by reewungjunerr via Freepik
