A US court on Thursday sentenced cryptocurrency entrepreneur Do Kwon to 15 years in prison for fraud connected to the collapse of his digital-asset empire, which wiped out $40 billion in investor funds and sent shockwaves through global crypto markets.
Gatekeepers News reports that Kwon, who admitted guilt in August after an international manhunt across Asia and Europe, was sentenced in New York. He still faces separate fraud charges in South Korea.
The 34-year-old founded Terraform Labs, which created TerraUSD — a so-called “stablecoin” marketed as being pegged to the US dollar to avoid wild price swings — and its sister token, Luna. Kwon promoted the tokens as the next breakthrough in crypto, drawing billions in investments and widespread media acclaim. South Korean outlets hailed him as a “genius,” and he was listed in Forbes 30 Under 30 Asia in 2019.
But in May 2022, TerraUSD and Luna collapsed in what experts described as a glorified pyramid scheme, causing thousands of retail investors to lose their life savings. Kwon left South Korea before the crash and spent months evading authorities.
He was eventually arrested in March 2023 at Podgorica airport in Montenegro while attempting to board a flight to Dubai using a fake Costa Rican passport. Montenegro later extradited him to the United States.
Following Thursday’s sentencing, US prosecutors outlined how Kwon made fraudulent claims to entice investors, including major American firms. At the height of the hype in early 2022, TerraUSD and Luna had a combined market value of more than $50 billion.
“Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit,” US Attorney Jay Clayton said.
Prosecutors also revealed that, after the collapse, Kwon sought “political protection” from various countries. They cited a recorded conversation in which he told an associate that his strategy in dealing with investigators was to “tell them to fuck off.”
In addition to his prison sentence, the court ordered him to forfeit more than $19 million in proceeds from his illegal activities. According to a Justice Department filing, he may be permitted to serve the remainder of his sentence in South Korea after completing at least half of it in the United States.
Kwon’s dramatic rise and fall has drawn comparisons to Elizabeth Holmes, the convicted American fraudster and disgraced founder of Theranos, and comes amid heightened global scrutiny of cryptocurrency markets following several major scandals.
