Michaela
Do Kwon, co-founder of Terraform Labs, has been sentenced to 15 years in prison after pleading guilty to wire fraud and conspiracy to defraud. The sentence followed a federal hearing in which victims of Terraform Labs detailed the financial losses they suffered.
Key Points
- Do Kwon sentenced to 15 years for Terraform Labs’ $40B collapse.
- Victims testified on personal and financial harm before sentencing.
- Kwon may face further prison time in South Korea after U.S. sentence.
According to Inner City Press, U.S. District Court Judge Paul Engelmayer of the Southern District of New York sentenced Kwon to 15 years in prison for his role in Terraform Labs’ 2022 collapse, which erased roughly $40 billion from the crypto market. Kwon will receive credit for time already served in the U.S. and 17 months spent in pre-extradition custody.
Before handing down the sentence, Judge Engelmayer heard testimony from several victims and considered the potential legal consequences Kwon could face in his native South Korea, where authorities are also pursuing a case against him.
Among the victims who spoke to Judge Engelmayer was Jake Collins, who described the personal impact of Kwon’s actions, including the loss of a close friend. Collins expressed that Kwon’s sentence would not fully address the broader harm, claiming the co-founder’s actions left “hopeful blockchain users fending for themselves.”
Collins noted that four years ago, he devoted himself to Terra Classic to mitigate further damage, building an archive node that still holds wallets online despite court orders to destroy the keys. He also suggested that Kwon’s guilty plea could obscure evidence of potential co-conspirators.
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“I do not blame anyone else for my being here today. I will not argue that my conduct was industry standard. If they were, they were bad industry standards and I, as a previous market leader, am responsible,” Kwon stated in court.
Judge Engelmeyer described earlier sentencing recommendations of five and twelve years as “unreasonable,” noting that Kwon had been “bitten by the crypto bug” and that this had not changed. The judge added that Kwon needed to be “incapacitated” from further wrongdoing and said that, if not for his guilty plea, the sentence would have been significantly higher.
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Calling Kwon’s fraud “unusually serious,” Engelmeyer described his actions as “despicable” because they exploited the trust of investors. Kwon could be extradited to South Korea after serving seven and a half years, where he may complete the remainder of his U.S. sentence and potentially face up to 40 additional years in prison.
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MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
