Crypto Magnate Do Kwon Sentenced to 15 Years in Prison
Meanwhile, a US federal judge in the Southern District of New York has handed down a 15-year prison sentence to Do Kwon, the founder of Terraform Labs.
Consequently, Kwon’s sentence is a result of his guilty plea to defrauding investors who purchased crypto coins issued by his company.
Therefore, the collapse of Terraform’s coins in May 2022 wiped out $40 billion and sent the crypto economy into a tailspin.
Not-So-Stablecoin
However, Kwon’s company, Terraform Labs, had announced plans to launch TerraUSD (UST), a stablecoin pegged to the US dollar by way of an algorithm.
Moreover, the algorithm would tie UST to a second coin issued by the firm, LUNA, allowing traders to exchange a dollar’s worth of LUNA for a dollar’s worth of UST.
Meanwhile, the price-balancing system failed in May 2022, leading to a panicked sell-off that drove the price of UST and LUNA to nearly zero.
Loop of Regret
However, Kwon had lied about UST’s capacity to automatically “self-heal,” and had instead struck a “gentlemen’s agreement” with a trading firm to artificially drive the price of UST back toward dollar parity.
Therefore, Kwon’s victims addressed the court, including one investor who reported having fallen into a “state of deep depression” after a large investment in LUNA came to be worth just $13.
Consequently, Judge Engelmayer was required to weigh various extraneous factors in deciding Kwon’s sentence, including his character and personal history, and the likelihood he might break the law again.
Final Plea
However, Kwon walked a fine line between appearing contrite and minimizing the extent of his fraudulent conduct in his final written plea to the judge.
Therefore, the government pointed out in its indictment that the case was not about mistakes, but about lies.
Consequently, Kwon was unable to dance around the magnitude of the losses suffered by investors, and was ultimately sentenced to 15 years in prison.
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