A onetime crypto star whose tokens helped ignite a broader market meltdown is now facing 15 years in federal prison. Do Kwon, the 34-year-old creator of the failed cryptocurrencies TerraUSD and Luna, was sentenced Thursday in Manhattan after pleading guilty to fraud tied to their 2022 collapse, the New York Times reports. Prosecutors said the South Korean citizen misled investors about the safety and adoption of his projects, then disappeared when the cryptocurrencies collapsed, wiping out tens of billions of dollars in value. They had asked for 12 years; his lawyers argued for five, saying his crimes stemmed from ego and panic, not straightforward greed.
US District Judge Paul Engelmayer went beyond the government's request, calling the scheme "fraud on an epic, generational scale" and saying Kwon had an "almost mystical hold" on investors as he kept deceiving them. Hundreds of victims submitted letters or addressed the court before sentencing, including a woman in the Republic of Georgia who said she put the value of her home into Luna, lost everything, and ended up homeless. One victim said he considered suicide after his father lost his retirement savings, the AP reports. Another said he persuaded his in-laws and numerous nonprofits to invest in the cryptocurrencies and now has to "live with the guilt."
"All of their stories were harrowing and reminded me again of the great losses that I've caused," Kwon said, per Reuters. "I want to tell these victims that I am sorry." Kwon was once known for mocking critics with remarks like "I don't debate the poor." Kwon went on the run after the collapse. He was arrested in Montenegro in 2023 after trying to fly to Dubai on a fake Costa Rican passport and was extradited to the US in January. The AP reports that he was credited for the 17 months he spent behind bars in Montenegro. The judge rejected his request to serve his sentence in South Korea, where his wife and the 4-year-old daughter he named after Luna live, though under his plea deal, he will be able to apply for a transfer when he has served half his sentence in the US.
The collapse of Kwon's cryptocurrencies wiped out around $40 billion in value and the wider crash it triggered wiped out hundreds of billions more. Kwon's fall adds to a growing list of crypto leaders facing prison after the 2022 rout. FTX founder Sam Bankman-Fried was sentenced last year to 25 years. Binance founder Changpeng Zhao received four months after a money-laundering plea, though he was later pardoned by President Trump.
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