Do Kwon, the South Korean entrepreneur behind the TerraUSD and Luna cryptocurrencies that collapsed in 2022, was sentenced Thursday to 15 years in federal prison for orchestrating what a judge described as an “epic fraud” that cost investors an estimated $40 billion.
U.S. District Judge Paul A. Engelmayer, speaking in Manhattan federal court, condemned Kwon for misleading ordinary investors who trusted him with their savings. “This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon,” Engelmayer said.
Kwon, 34, co-founded Terraform Labs, based in Singapore, and admitted to deceiving investors about TerraUSD, a stablecoin designed to maintain a $1 value. He previously pleaded guilty to conspiracy to defraud and wire fraud, acknowledging he misrepresented the role of a high-frequency trading firm that secretly propped up TerraUSD’s price when it fell below its peg in May 2021.
During the hearing, Kwon, dressed in yellow prison garb, apologized to the hundreds of victims who submitted letters describing the financial devastation caused by the collapse. One victim, Ayyildiz Attila, said he lost between $400,000 and $500,000, describing the loss as erasing years of hard work and savings. Kwon’s lawyer said he expressed genuine remorse and intends to continue efforts to make amends.
Prosecutors had sought at least a 12-year sentence, citing the widespread financial damage triggered by the TerraUSD crash and its ripple effects across the cryptocurrency market. Kwon’s attorneys had requested a sentence of no more than five years so he could return to South Korea to face local charges.
Kwon also agreed to a civil settlement in 2024 totaling $4.55 billion with the U.S. Securities and Exchange Commission, which included an $80 million fine and a ban from cryptocurrency transactions. He still faces criminal charges in South Korea, and under his plea deal, prosecutors will not oppose a request to serve part of his U.S. sentence abroad after completing half of the term.