NEW YORK (AP) — Cryptocurrency tycoon Do Kwon is scheduled to be sentenced Thursday for misleading investors after his company’s crypto ecosystem collapsed in 2022, costing investors billions of dollars.
Kwon, known by some as the “King of Cryptocurrency,” pleaded guilty in Manhattan federal court in August to fraud charges stemming from the $40 billion collapse of Terraform Labs.
The company has touted its TerraUSD as a reliable “stablecoin” — a currency that is typically pegged to a stable asset to protect against wild price swings. But prosecutors said it was all an illusion and eventually collapsed, devastating investors and triggering “a cascade of crises that engulfed the cryptocurrency market.”
As part of the plea deal, Kwon, who is from South Korea, agreed to forgo more than $19 million in restitution.
While federal sentencing guidelines recommend about 25 years in prison, prosecutors have asked the court to sentence Kwon to 12 years in prison. They cited his guilty plea and the fact that he faces further prosecution in South Korea and that he is already serving a prison sentence in Montenegro while awaiting extradition.
“The scale of Kwon’s fraud was enormous and permeated virtually every aspect of Terraform’s purported business,” prosecutors wrote in a recent memo to a judge. “His rampant lies caused economic devastation.”
Kwon’s lawyers asked for a sentence of no more than five years, arguing in their own memo that Kwon acted not out of greed but out of arrogance and desperation.
“I alone am responsible for everyone’s suffering. The community expected me to know the way, and my arrogance led them astray,” Kwon wrote in a letter to the judge, while adding, “I made a false statement out of recklessness that is now deeply regrettable.”
Authorities said global investors suffered losses from the collapse of the Singapore-based cryptocurrency company that Kwon co-founded in 2018. Holders of TerraUSD and its floating sister currency Luna lost about $40 billion in market capitalization after the stablecoin’s price fell well below $1.
Quan was arrested on March 23, 2023 while traveling in Europe with a false passport and was later extradited to the United States from Montenegro.
