US court sentences former cryptocurrency mogul to 15 years in prison

Do Kwon, co-founder of cryptocurrency firm Terraform Labs, was sentenced Thursday to 15 years in U.S. federal prison for cryptocurrency fraud, which U.S. District Judge Paul A. Engelmayer described as being on «an epic, generational scale.» After Terraform Labs’ ecosystem collapsed, investors reported $40 billion in losses, according to the Associated Press.

Even though Kwon attempted to rebuild the company, he ultimately fled using a false passport, according to prosecutors. In March 2023, he was extradited to the U.S. following his arrest in Montenegro.

Kwon, 34, pleaded guilty in August to fraud charges stemming from the 2022 collapse of Terraform Labs’ stablecoin, TerraUSD, and its associated token, Luna. TerraUSD had been marketed as a stablecoin pegged to the U.S. dollar, but prosecutors said its stability depended on undisclosed cash infusions rather than reliable backing. When the peg failed, the resulting crash triggered broader turmoil in cryptocurrency markets, with an estimated 1 million victims worldwide.

That said, despite a series of high-profile cryptocurrency fraud cases such as Kwon’s and Sam Bankman-Fried’s, the cryptocurrency industry is thriving worldwide, with the U.S. trying to become a leader in this race.