New York — Cryptocurrency mogul Do Kwon is set to be sentenced on Thursday for misleading investors who lost billions due to his company’s cryptocurrency ecosystem. It collapses in 2022.
Kwon, known to some as the “King of Cryptocurrencies,” plead guilty in Manhattan federal court last August, on fraud charges stemming from the $40 billion collapse of Terraform Labs.
The company has promoted its TerraUSD coin as a reliable “stablecoin” – a type of currency typically associated with stable assets to prevent radical price fluctuations. But prosecutors say it was all an illusion that collapsed, devastating investors and sparking “a cascade of crises that swept through cryptocurrency markets.”
Kwon, who is from South Korea, agreed to give up more than $19 million as part of the plea deal.
While federal sentencing guidelines recommend approximately 25 years in prison, prosecutors asked the court to sentence Kwon to 12 years in prison. They cited his guilty plea, the fact that he faces further prosecution in Korea, and that he has already spent a period of time in Montenegro while awaiting extradition.
“Kwon’s fraud was massive in scope, permeating virtually every aspect of Terraform’s alleged business,” prosecutors wrote in a recent memo to the judge. “His rampant lies have left a trail of financial devastation in their wake.”
Kwon’s lawyers requested that the sentence not exceed five years, saying in their own memorandum that his behavior did not stem from greed, but rather arrogance and desperation.
In a letter to the judge, Kwon wrote: “I alone am responsible for everyone’s pain. Society looked to me for the way, and in my arrogance I led them astray,” while adding: “I made misrepresentations that came from impudence that are now a source of deep remorse.”
Authorities said investors around the world lost money in the collapse of the Singaporean cryptocurrency company, which Kwon co-founded in 2018. About $40 billion was wiped off the market value of holders of TerraUSD and its floating sister currency, Luna, after the stablecoin fell well below the price of $1.
Kwon was extradited To the United States from Montenegro after his arrest on March 23, 2023 while traveling on a false passport in Europe.