Crypto Tycoon Do Kwon Sentenced to 15 Years for $40 Billion Cryptocurrency Fraud

Do Kwon featured in Forbes magazine's 30 under 30 Asia list.

United States:

A US court sentenced cryptocurrency entrepreneur Do Kwon to 15 years in prison Thursday for fraud connected to his company's collapse, which eliminated $40 billion of investor funds and destabilized global cryptocurrency markets.

Kwon, who developed two digital currencies central to the bankruptcy, received his sentence in New York court where he had entered a guilty plea in August following an international manhunt across Asia and Europe.

He continues to face fraud allegations in his home country of South Korea.

The 34-year-old's Terraform Labs created TerraUSD, marketed as a "stablecoin" designed to maintain parity with stable assets like the US dollar to avoid significant value fluctuations.

Kwon effectively promoted his cryptocurrencies as revolutionary innovations, attracting billions in investments and worldwide enthusiasm.

South Korean media showered him with acclaim, describing him as a "genius" while thousands of individual investors eagerly committed funds to his enterprise.

In 2019, Kwon earned recognition in Forbes magazine's 30 under 30 Asia list.

Despite securing billions in investments, TerraUSD and its companion token Luna collapsed catastrophically in May 2022.

Analysts described Kwon's operation as an elaborate pyramid scheme that caused many investors to lose their entire life savings.

He departed South Korea before the collapse and evaded authorities for months.

The crypto executive was apprehended in March 2023 at Podgorica airport in Montenegro while attempting to board a flight to Dubai, carrying a counterfeit Costa Rican passport.

He was subsequently extradited from Montenegro to the United States last year.

'Elaborate schemes'

Following Kwon's sentencing Thursday, US prosecutors detailed how he made fraudulent representations about his business to attract investors, including American investment firms.

At its height in spring 2022, the combined market value of TerraUSD and Luna exceeded $50 billion.

"Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform's cryptocurrencies for his own benefit," US Attorney Jay Clayton stated.

When the enterprise collapsed, Clayton's office reported in a press release, Kwon attempted to secure "political protection" from multiple countries.

Prosecutors referenced a recorded conversation in which he instructed an associate that his strategy for handling investigating authorities was to "tell them to fuck off."

In addition to his prison sentence, Kwon was ordered to surrender over $19 million in proceeds from his fraudulent operations.

The US Justice Department indicated in a court filing that he might be permitted to complete his sentence in South Korea, provided at least half is served in the United States.

Cryptocurrencies have faced increasing regulatory scrutiny following numerous controversies in recent years, including several high-profile exchange collapses.

Kwon's meteoric rise and dramatic downfall has drawn comparisons to convicted American fraudster Elizabeth Holmes, the disgraced founder of medical technology startup Theranos.