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The “crypto king” Do Kwon sentenced to 15 years in prison for $40 billion fraud

He apologized after hearing victims describe the consequences of his fraud

Newsroom December 12 06:30

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Former cryptocurrency magnate Do Kwon was sentenced on Thursday to 15 years in prison, following the collapse of his cryptocurrency ecosystem, which was revealed to be a $40 billion fraud.

Victims stated that the 34-year-old fintech specialist used their trust to convince them that the investment — secretly supported by cash injections — was safe.

Kwon, a Stanford graduate known by some as “the king of crypto,” apologized after hearing victims describe the consequences of his actions: their savings vanished, charities collapsed, and lives were destroyed. One victim wrote to the judge saying they had contemplated suicide after losing their father’s retirement money in the scheme.

According to CNN, during the sentencing hearing at the Federal Court in Manhattan, the judge said the government’s recommendation of 12 years in prison was “absurdly lenient” and the defense’s request for five years was “unthinkable and absolutely unreasonable.” Kwon faced a maximum sentence of 25 years.

“Your criminal conduct caused real people to lose $40 billion in real money, not just imaginary losses,” the judge told Kwon.

Kwon pleaded guilty in August to fraud charges related to the collapse of Terraform Labs, the company he co-founded in 2018 in Singapore. The losses exceeded the combined losses from the frauds committed by FTX founder Sam Bankman-Fried and OneCoin co-founder Karl Sebastian Greenwood, prosecutors said. The judge estimated there may have been around one million victims.

Terraform Labs had promoted TerraUSD as a reliable “stablecoin,” a type of currency usually tied to stable assets to avoid drastic price fluctuations. However, prosecutors said this was an illusion sustained by external cash injections, and it collapsed after the coin fell below $1. This collapse dragged down the associated cryptocurrency Luna, triggering cascading crises across crypto markets.

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Kwon attempted to rebuild Terraform Labs in Singapore before fleeing to the Balkans with a fake passport, according to prosecutors. He has been imprisoned since his arrest in March 2023 in Montenegro. He was credited with the 17 months he spent in prison there before being extradited to the U.S.

Kwon agreed to pay more than $19 million as part of his plea agreement. His lawyers argued his conduct stemmed not from greed but from arrogance and desperation. The judge rejected his request to serve his sentence in his home country, South Korea, where he also faces prosecution and where his wife and 4-year-old daughter live.

“I have spent almost every minute of the last few years thinking about what I could have done differently and what I can do now to make it right,” Kwon told the judge. Hearing the victims, he said, “was difficult and reminded me once again of the tremendous losses I caused.”

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