NEW YORK — Terraform Labs co-founder Do Kwon is waiting a little longer than expected to find out how long he will serve in prison for masterminding a massive cryptocurrency fraud that cost the cryptocurrency ecosystem an estimated $50 billion in May 2022.
During the first hour or so of the lengthy hearing, District Judge Paul Engelmeyer of the Southern District of New York (SDNY) scolded prosecutors for dumping a mountain of victim impact statements (315 letters in total) on the court and defense 24 hours before the hearing began. Six victims spoke before the judge at his sentencing hearing Thursday morning, including those who spoke in person and those who called in before the judge took his lunch break.
The judge offered Kwon and his legal team the chance to delay sentencing for up to six weeks in light of new victim impact statements. Engelmeier’s typically calm and measured court appearance was clearly angered by prosecutors’ late-night handover of victim statements, and he reiterated to both sides that it was a “big deal” to present such powerful material at the last minute.
Quan and his lawyers declined the opportunity to reschedule the sentencing, telling the court that people traveled from around the world to attend and waiving their right to appeal the court’s decision based on the late disclosure of victim statements.
Once Engelmeier agreed to continue the proceedings, he took the time to criticize the government’s delays in gathering victim statements:
“I have to say the obvious — you need to do better,” Engelmaier said. “In future cases, you need to notify the victim much earlier… Throwing a 315 letter in court is simply unacceptable… It’s fundamentally disrespectful to the defense and, most importantly, it’s not completely respectful to the victim.”
Excerpts from these victim statements, which featured prominently in prosecutors’ speeches to the court, detailed the financial and personal hardship caused by the collapse of the Terra/LUNA ecosystem in 2022.
Victims also have the opportunity to speak for themselves at the hearing. Victim Chauncey St. John took the stand in person to detail how the company’s implosion destroyed his charity, Angel Protocol, and the nonprofits it served. He also told the court how his in-laws, including his wife’s parents and brother, had invested their life savings in Terra/LUNA and now faced delayed retirement and debt.
“I have to live with the guilt of their loss every day,” St. John said. “I forgive [Do Kwon] Personally, I pray to God to have mercy on his soul. “
Other victims were less forgiving.
A man called court to tell the judge how he had lost a friend (implying suicide) after the collapse of Terra caused huge financial losses. Another detailed losses so severe that he was forced to move back in with his parents, lost his wife to divorce, and watched his sons work as car mechanics instead of going to college to study engineering as they had hoped before the family’s finances were devastated by fraud.
“I never imagined that a man I had never met, never spoken to, could ruin my life so completely,” said Stanislav Trofinchuk, a Ukrainian.
A 58-year-old Russian woman told the court (through an interpreter in court) that she lost all her assets in the collapse and now she is homeless and “living on the streets” of Tbilisi, Georgia.
“$81,000 [invested in Terra/LUNA] It turned into $13 that I could hold in the palm of my hand,” the woman said. “Do you understand the mental toll this has taken on me and where I’m at now? “
Throughout his testimony, Quan looked haggard and sat expressionless, seemingly unmoved.
