Do Kwon, the South Korean entrepreneur behind two cryptocurrencies that were responsible for an estimated $400 billion loss in 2022 and caused significant market turbulence, pleaded guilty to two counts of fraud and wire fraud in a US court on Tuesday.
At 33 years old, Kwon co-founded Terraform Labs in Singapore and was the creator of the Terrausd and Luna currencies. He appeared in a federal court hearing in New York, having initially pleaded not guilty in January to nine charges, which include securities fraud, wire fraud, merchandise fraud, and conspiracy to commit money laundering.
Kwon was accused of deceiving investors about Terrausd in 2021—a Stablecoin intended to maintain a value equivalent to one US dollar—leading him to plead guilty to two counts under a plea agreement with Manhattan prosecutors.
He could face a maximum of 25 years in prison when Judge Engelmeyer sentences him on December 11. However, prosecutor Kimberly Ravener noted that Kwon has agreed to a prison term of no more than 12 years if he takes responsibility for his actions. He has been in custody since his extradition from Montenegro late last year.
Kwon is among several cryptocurrency executives facing federal charges after the 2022 downturn in digital token prices led to the collapse of numerous businesses. Sam Bankman-Fried, the founder of FTX—the largest crypto exchange in the US—was sentenced to 25 years in prison in 2024.
Prosecutors allege that when Terrausd dipped below $1 in May 2021, Kwon misled investors, claiming that the “Terra Protocol,” a computer algorithm, had restored the coin’s value. Instead, he allegedly arranged for the covert purchase of millions of dollars in tokens to artificially inflate the price through high-frequency trading companies.
These false representations reportedly misled retail and institutional investors, enticing them to invest in Terraform products and escalate the value of Luna.
During the court proceedings, Kwon expressed remorse for his actions.
“I made misleading statements about why it regained its value without disclosing the involvement of the trading company in restoring that PEG,” Kwon stated. “What I did was wrong.”
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Kwon has also agreed to pay $80 million in civil penalties in 2024 and is prohibited from engaging in crypto trading as part of a $4.555 billion settlement with the U.S. Securities and Exchange Commission.
Additionally, he faces charges in South Korea. As part of his plea agreement, prosecutors indicated they would not oppose his potential transfer to serve his sentence overseas after completing his time in the US, Ravener stated.
Source: www.theguardian.com
