Do Kwon, the controversial founder of Terraform Labs and the architect behind the failed TerraUSD and Luna crypto assets, received a 15-year federal prison sentence on Thursday. US District Judge Paul A. Engelmayer, delivering the sentence in a Manhattan courtroom, described the misconduct as an “epic fraud.” Kwon, now 34, had earlier admitted to deceiving investors about the stability mechanisms of TerraUSD, a token marketed as a safeguard during periods of market turmoil. “Epic Fraud” During a hearing in Manhattan federal court, Engelmayer said “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.” The sharp collapse of TerraUSD’s peg and the broader wipeout of both tokens in 2022 ultimately erased an estimated $40 billion in value and destabilized the crypto sector, as well as triggering failures across multiple firms. During the hearing, Kwon addressed both the court and the hundreds of victims who had submitted written accounts detailing their financial and emotional losses. He apologized for the consequences of his actions. Among them was Ayyildiz Attila, who recounted losing nearly half a million dollars and described how years of savings and long-term plans disappeared in the turmoil following the crash. Prosecutors argued that Kwon orchestrated efforts to inflate the value of his tokens and quietly enlisted a high-frequency trading firm to intervene when TerraUSD first slipped below its $1 level, even as he publicly attributed the recovery to the project’s automated stabilization system. Charging documents outlined nine criminal counts, which included securities fraud, wire fraud, commodities fraud, and money-laundering conspiracy. Kwon, however, ultimately pleaded guilty to two counts of conspiracy to defraud and wire fraud. Prosecutors had sought a minimum of 12 years, while the defense urged no more than five, citing his wish to return to South Korea to address separate criminal proceedings there. In addition to the prison term, Kwon previously agreed to pay an $80 million civil penalty and accept a ban on crypto-related activities as part of a multibillion-dollar settlement with the US Securities and Exchange Commission (SEC). Under the terms of his plea deal, US authorities will not oppose a request for transfer abroad once he completes half of his sentence, which opened the possibility that he may eventually face charges in his home country. Kwon’s behavior in the lead-up to Terra’s collapse also resurfaced. Once branded as a trash-talking entrepreneur who openly mocked his detractors, he later admitted that he had gotten “carried away” in his interactions on crypto Twitter. In interviews, he said he had developed a persona over time and behaved in certain ways largely for “entertainment value.” While he expressed remorse for his tone and took “full responsibility” for the weaknesses in Terra’s design, he maintained that some of the charges brought by South Korean prosecutors were “politically motivated.” Fatman Reflects on Kwon’s Downfall The anonymous sleuth, Fatman Terra, who helped expose Kwon after several whistleblowers approached him, including an employee from trading firm Jump Crypto, admitted that although he once doubted accountability would ever arrive, he now believes the outcome was inevitable. He added, “Crypto is full of rug pullers and scammers – many highly sophisticated and manipulative. Most get away with what they do. People like Zach manage to catch a couple big ones, but law enforcement doesn’t have nearly enough resources to go after everyone, and most of the wrongdoings in this space get swept under the rug. But if you are being wronged – harassed, tormented, scammed, rugged, whatever it may be – just know that there are decisive actions you can take to bring justice in this world.” The post Terra’s Fall Comes Full Circle: Do Kwon Hit With 15-Year Prison Term in US Court appeared first on CryptoPotato .
