Do Kwon, the South Korean cryptocurrency mogul, was sentenced to 15 years in prison by a New York court on Thursday. He admitted to fraud charges related to the $40 billion collapse of TerraUSD and Luna in 2022.
Kwon, now 34, was arrested in Montenegro in 2023 while attempting to travel to Dubai using a fake passport. He was extradited to the United States at the end of last year and pleaded guilty in a New York court in August this year. The court issued its ruling today. Kwon still faces fraud charges in South Korea.
Terraform Labs, founded by Kwon, launched the cryptocurrency TerraUSD, which was marketed as a 'stablecoin,' claiming that its value was pegged to stable assets such as the U.S. dollar to avoid sharp fluctuations. He successfully marketed his currency as the next big thing in cryptocurrencies, attracting billions of dollars in investment and sparking a global frenzy.
Kwon once claimed that algorithmic stablecoins like TerraUSD represented the future of money and faced widespread criticism for mocking critics on social media. His token's collapse triggered a series of cascading crises, eventually leading to what the industry dubbed the 'crypto winter.' Kwon had already left South Korea before the collapse and remained a fugitive for several months.
He was arrested at Podgorica Airport in the capital of Montenegro in March 2023 while preparing to board a flight to Dubai, carrying a forged Costa Rican passport.
Prosecutors stated that at its peak in the spring of 2022, the total market value of all cryptocurrencies associated with Terraform exceeded $50 billion. The failure of these cryptocurrencies harmed hundreds of thousands of investors worldwide, with some losing their life savings almost overnight when TerraUSD became unpegged from the dollar.
In May 2022, TerraUSD permanently lost its peg, and its sister coin Luna plummeted to near zero within days. This collapse ended the previous bull run and triggered a wave of bankruptcies across the industry. The ripple effects ultimately led to the bankruptcy of Sam Bankman-Fried’s (also known as 'SBF') cryptocurrency exchange, FTX.
