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.”
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.
“This is a landmark day in Autonomy’s history,” Mike Lynch declared in a press release on August 18, 2011, as he announced the sale of his software company, Autonomy, to Hewlett-Packard for $11 billion.
June 6, 2024, will be an even more significant date for Lynch.
After nearly 13 tumultuous years and a drawn-out trial in the heart of Silicon Valley, Lynch, once known as the “British Bill Gates,” has been cleared of fraud charges. The verdict marks a stunning reversal of fortune for the entrepreneur.
Lynch said Thursday he was “overjoyed” at his acquittal. “The truth has finally prevailed,” his lawyers declared.
He is now due to return to Britain, but the fight to clear his name continues. HP nearly won a civil lawsuit against Lynch and another Autonomy head, Sushoban Hussain, in London two years ago. The company is seeking $4 billion in damages. Lynch had previously said he would appeal the decision.
By all accounts, the acquisition was a disaster. Just five weeks after it was announced, HP’s CEO, who had signed the deal, was fired. Lynch left Autonomy less than a year later. The lucrative acquisition briefly cemented Lynch’s reputation as Britain’s most successful tech mogul. Its real legacy was more than a decade of bitter legal battles.
In November 2012, HP’s new management wrote down the value of Autonomy by $8.8 billion, alleging “significant” accounting irregularities, disclosure deficiencies, and “plain misrepresentations” prior to the acquisition. After years of investigations and legal proceedings on both sides of the Atlantic, a US federal grand jury indicted Lynch on criminal charges in November 2018. After the civil proceedings were concluded, the UK agreed to Lynch’s extradition.
His legal troubles grew last year. Having nearly lost a British civil lawsuit, Lynch also lost an appeal against his extradition in the UK High Court. A few weeks later, he was on a plane to California.
The trial in San Francisco has been a tough test for Lynch, who has been fighting to avoid extradition to the U.S. to face more than a dozen fraud charges. Federal prosecutors have a horrific record of convictions, forcing Lynch’s defense team to adjust their defense ahead of the trial.
From the start of the saga, Lynch has maintained that Autonomy’s collapse was the result of mismanagement of valuable HP assets, not fraud, but rather the failure of HP to provide evidence to support that claim, but U.S. District Judge Charles Breyer, who presided over the case, has barred Lynch’s lawyers from presenting evidence to support that claim.
Failing to focus on the post-acquisition situation, Lynch’s defense was based on three main arguments: first, that running a company like Autonomy is much more complicated than the prosecution would have the jury believe, second, that Lynch is a very different person to the person he has been portrayed to be, and third, that HP rushed to conduct its due diligence and close the deal.
One of Lynch’s lawyers, Reid Weingarten, declared on the first day of the trial that the government’s case was “black and white,” “and this trial is going to show that that’s not how the world works. The world works in shades of gray. The world is complicated.”
Life is “delicate and messy”, Lynch told the court, suggesting that his trial is effectively “like peering through the door to watch sausages being made. The thing you have to bear in mind is that if you take a microscope to a clean kitchen, you’re going to find germs. And I think Autonomy is no exception.”
Prosecutors tried to portray Lynch as an intimidating, ruthless businessman responsible for every aspect of the Autonomy empire. Jurors heard about the piranha tank in the atrium of the company’s headquarters and conference rooms named after James Bond villains.
Lynch said he found it “surreal” to hear government witnesses testify about many discussions and decisions he was unaware of. He said he delegated work that was outside his expertise and spent “about 30 percent” of his time at Autonomy in his later years spending time with his family and pursuing other hobbies.
“I believe the more you know about him, the better it is for us,” Weingarten told jurors before Lynch’s testimony.
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Prosecutors said Mr Lynch had “half a billion reasons” to commit the fraud – one for every pound he claimed to have made from HP’s acquisition of Autonomy – but Mr Lynch said the company wanted to remain independent.
Autonomy is one of the stars of London’s FTSE 100 stock index and is still in the process of acquiring itself. Lynch says he only started considering the idea after meeting with HP executives at a luxury home in the English countryside. It was the 64% premium on Autonomy’s shares that ultimately convinced the company to accept the deal.
Lynch argued that HP was determined to rapidly transform itself from a hardware maker into a software giant. press release It was only when it was released that the company announced it was buying his company, a process he recalled on the stand as “total chaos.”
Prosecutors argued that HP’s handling of the proceedings was irrelevant: They alleged that Lynch orchestrated a massive fraud over years and that Autonomy used a variety of accounting tricks to inflate sales growth.
But Lynch stressed that HP was “not at all” misled about Autonomy’s value. A California jury believed Lynch and dismissed the case, which the U.S. government had detailed, calling more than 30 witnesses.
Six years ago, a jury in the same court came to a different conclusion about one of Lynch’s closest business partners. Hussain, who served as Autonomy’s chief financial officer, was convicted of conspiracy, wire fraud and securities fraud in connection with the deal in 2018. He was released from a U.S. prison in January after serving a five-year sentence.
Lynch, who was awarded an OBE at the height of his career and served as an adviser to the British prime minister, spent much of the year before his trial under effective house arrest, guarded around the clock by two armed guards, and the threat of more than 20 years in prison loomed large if convicted.
The businessman left court a free man on Thursday. “I look forward to returning to the UK and getting back to what I love most – my family and innovating in my field,” he said.
On the morning of March 28th, in a downtown Manhattan courtroom, Sam Bankman Freed, a tech genius turned con artist who remained unrepentant despite his trial and conviction, finally learned his fate.
Bankman Fried, who founded the virtual currency exchange FTX, was found guilty on November 2, 2023, of seven counts of wire fraud and money laundering conspiracy.
Fallen Bitcoin booster was found to have siphoned billions of dollars in customer funds to FTX’s sister hedge fund Alameda Research to stay solvent – His pockets were then stuffed with money from unlucky customers, precipitating the organization’s collapse.
“Sam Bankman Freed carried out one of the biggest financial frauds in American history, a multi-billion dollar scheme to make him the king of cryptocurrencies. However, the crypto industry was new and Sam Bankman Players like Bankman Fried may be new, but this type of corruption has been around for a long time,” Manhattan U.S. Attorney Damien Williams said after the conviction. “This case has always been about lies, deceit and theft, and we have no patience for that.”
Prosecutors then asked Judge Lewis Kaplan to impose a prison sentence of 40 to 50 years. They emphasized the “extremely serious nature of the harm to thousands of victims” and said:[prevent] Defendant shall not commit fraud again; [send] This sends a strong signal to those who attempt to engage in financial misconduct that the consequences will be severe. ”
In order to seek a heavier sentence, prosecutors submitted victim impact statements, revealing how individual and institutional investors were harmed by Bankman Freed’s actions.
“In 2022, at the age of 24, I lost all my life savings, which amounted to more than $20,000,” said one person who did not even try to invest in cryptocurrencies, but simply took advantage of the interest rate operated by FTX. I wrote that it was for a reason. – Bearing Savings Account.
Another victim, who said she had “invested a significant portion of her savings in FTX,” said she was staring at an uncertain future, adding: “Immense anxiety, stress and uncertainty about how I'm going to support myself and my family.” “It's causing sex,” he said.
The “disbelief and fear” the victim described upon learning of FTX’s financial crisis reflected the widespread shock at the exchange’s collapse. Bankman Fried has long been a rising star in the crypto world, attracting both investors and politicians with his trading platform.He argued that exchange was safer. – and less risky – than any other such platform. FTX rose to fame on the back of his advocacy, boosting Bankman Freed’s profile and lining his pockets.
FTX is a huge success: SBF became a millionaire before he was 30 years old
Before Bankman Fried turned 30, his fortune was in the billions. FTX and its biggest competitor, Binance, used to process most crypto transactions around the world.
All the while, with his uniform of T-shirts and shorts and lofty philosophical pronouncements, Mr. Bankman-Fried developed the persona befitting the next tech impresario. His parents, both law professors at Stanford University, studied utilitarianism (in effect, the concept that moral actions are those that achieve the greatest good for the greatest number of people), and it was through this context that he learned about commerce. declared that it would evaluate.
Bankman-Fried said he believes in effective altruism. This is a philanthropic endeavor beloved by big tech leaders who believe strategic giving to achieve the greatest number is a virtue. Some proponents of effective altruism promote an “earn to give mentality.” This means that accumulating extreme wealth is moral because it can be donated.
The former mogul's enthusiasm for contributing to society has also permeated politics. He has donated more than $40 million to the 2022 election.
Most of Mr. Bankman Fried’s donations went to the Democratic Party and related committees, but he also poured large sums of money into “dark” contributions to Republican candidates. According to CBS NewsBankman Fried wondered if she might have been the “second or third-largest” donor to the 2022 midterm elections.
While at the top, Bankman Freed chatted with celebrities including Bill Clinton and Tony Blair at the 2020 Cryptocurrency Conference in the Bahamas. He moved FTX to Caribbean countries because it employs a trading mechanism that is prohibited in the United States. new york times report.
Among Bankman Fried’s closest friends was Alameda Research CEO Caroline Ellison. Although their business relationship was complicated, Ellison and Bankman Freed continued an on-and-off romantic relationship over the years.
Like Bankman Freed, Ellison made lofty declarations. “Nothing makes us realize how stupid the normal unmedicated human experience is like regular amphetamine use,” she said in the paper. bomb tweet.
The FTX team's life in the Bahamas seemed to reflect the quirkiness that the tech industry loves. Bankman Freed, Ellison, and eight other members of his entourage lived together in the penthouse. reportedly Access to stimulants – Our in-house clinic will be happy to prescribe it for you.
Everything goes wrong: FTX goes bankrupt, SBF goes to court
Bankman Fried’s fortunes reversed in November 2022. That month, crypto industry publication CoinDesk report He reportedly held billions of dollars in FTT, FTX’s own cryptocurrency. There was a problem because the CEO was using FTT as collateral for a huge loan. When news broke about Binance’s FTT holdings, Binance CEO Changpeng Chao said that the company would dispose of its $500 million FTT holdings due to “recently revealed facts.” FTT plummeted, creating a virtual bank run among customers. FTX, like Alameda Research, sought bankruptcy protection.
It became clear to the outside world that there was an $8 billion hole in FTX’s budget. In December, the U.S. Attorney’s Office in Manhattan charged Bankman Freed with financial crimes for allegedly using customer and investor funds to make risky trades and assist Alameda Research.
At Bankman Freed’s trial in late 2023, the prosecution alleged that Bankman Freed was involved in a malicious fraud from 2019 until November 2022, when FTX went bankrupt. They claim Bankman Freed “misappropriated and misappropriated” FTX customers’ deposits and funneled “billions of stolen dollars” to bloat wallets and fund high-risk investments. did.
Prosecutors also said Bankman Freed shuffled funds to pay for his expensive lifestyle. They say the “exorbitant expenditures” unrelated to FTX covered Mr. Bankman Freed’s personal expenses, including more than $200 million in real estate in the Bahamas, speculative investments and repayments to Alameda’s lenders. said.
During Mr. Bankman-Fried’s month-long trial, his aides took the stand against him. Some of the most damning testimony came from his ex-girlfriend Ellison, who served as the prosecution’s star witness.
“Did you commit any crimes while working in Alameda?” Ellison was asked. She answered: “Yes, I did…” [Bankman-Fried] directed me to commit these crimes. ”
Despite numerous revelations about FTX’s questionable internal affairs, Bankman Fried made the shocking decision to testify in his own defense. “I made a lot of little mistakes and I made a lot of big mistakes,” Bankman Freed told jurors. “There was a serious oversight.”
Bankman Freed made management errors, including failing to establish a dedicated risk management team. But when attorney Mark Cohen asked if he had defrauded his clients or stolen their money, Bankman Fried responded, “No, I didn’t.”
When it came time for the prosecution to cross-examine Bankman-Fried, the lawyers questioned him on everything from his character. Mr Ellison told jurors that his appearance as limp and bedridden was an act and that he drove a Toyota Corolla as part of his branding. – Discrepancies between FTX’s public and private announcements.
“Mr. Bankman Freed, do you agree that you know how to tell a good story?” asked prosecutor Daniel Sassoon. “I don’t know. It depends on what metrics you use,” he said, without giving a direct answer.
Mr. Sassoon asked about his colleague’s comments. new york timesIn it, Ms. Bankman-Fried claimed that she considered cutting her hair to have negative value because, “I think it’s important that people think I’m crazy.“ From.“ “I don’t think I meant that,” Bankman Fried said.
“Do you consider yourself an intelligent man?” Sassoon pressed.
“Not in all respects, but in many respects,” Bankman-Fried said.
“As CEO of FTX, did you think highly of yourself?”
“Hooray.”
Unrepentant SBF faces decades in prison
During Bankman Freed’s trial, his lawyers pressed him to portray him as a “math nerd who doesn’t drink or party” and is crazy. Prosecutors pushed back against the baby-in-the-woods argument during sentencing submissions, pointing out that he hardly led a life of hardship.
“With all the advantages afforded by a comfortable upbringing, an education at MIT, a prestigious start to a career in finance, and a worthy idea for a start-up business, Bankman Fried was able to achieve the rewards he envisioned.“ “He could have pursued a productive and altruistic life,” they said.
“Rather, his life in recent years has been one of unparalleled greed and arrogance: ambition and rationalization, risk-seeking and repeated gambling with other people’s money.”
In response, Bankman Fried’s team painted him as a victim, writing that prosecutors presented their version of him as a “depraved supervillain.” [with] Dark and megalomaniac motives. ”
“The government seeks to complete the sentence of 32-year-old Sam Bankman Freed,” his attorneys wrote in a statement regarding prosecutors’ 40 to 50-year sentence. “There’s no need to crush Sam like this.”
They, too, suggested a sentence ranging from 63 to 78 months, citing his elite education.
“Offenders with no criminal history, like Sam, are the least likely to reoffend,” they said. “And college-educated offenders are less likely to reoffend.”
In a February petition seeking a reduced sentence, Bankman Fried said there was “zero harm to customers, lenders and investors…The company was solvent at the time of the bankruptcy filing…The money was there.” “It is not lost.”
John Ray, who was appointed FTX CEO to oversee the bankruptcy, denounced Bankman Freed’s claims in a court filing.
“Mr. Bankman Freed continues to live a life of delusion. The ‘business’ he left on November 11, 2022 was neither solvent nor secure. “A large amount of money was stolen by Mr. Bankman Freed,” Ray wrote.
It seems unlikely that they will receive lenient treatment.
Neema Rahmani, president of the West Coast Trial Lawyers Association and a former federal prosecutor, said Bankman Freed “will serve a significant prison term.”
“He refused to accept responsibility and tried to shift the blame onto others. This is one of the greatest
The criminal fraud trial of the British technology mogul once referred to as “Britain’s Bill Gates” is set to commence today in San Francisco.
Mike Lynch, the co-founder of British software company Autonomy, stands accused of artificially boosting the software company’s sales, deceiving auditors, analysts, and regulators. In 2011, before Hewlett-Packard’s significant takeover of the company, he even threatened those who raised concerns.
He has consistently denied any wrongdoing and maintains his innocence. If found guilty, he could face up to 25 years in prison.
HP purchased Autonomy in an $11.1bn (£8.72bn) deal to enhance its software business. However, just a year later, they reduced the purchase price by $8.8 billion, citing accounting irregularities and misstatements in the business.
In 2019, Lynch was indicted by a federal grand jury on 17 charges, including wire fraud, securities fraud, and conspiracy.
Despite past accolades, including an OBE in 2006 for his contributions to enterprise and an appointment to Prime Minister David Cameron’s Science and Technology Council in 2011, Lynch’s current situation is dire. He has spent the past year under house arrest preparing for trial.
Lynch was extradited from Britain to the US last May. After posting $100 million bail, he was required to wear a GPS ankle tag and be under constant surveillance by armed guards.
In a first-time allowance back in November, he could leave the luxurious San Francisco compound where he is based daily between 9 am and 9 pm, albeit with strict conditions.
MTech mogul Ike Lynch, once known as Britain’s Bill Gates, has been in San Francisco for the past 10 months with a GPS bracelet on his ankle and two armed guards watching him 24/7. This week, he faces a tough battle for his freedom in court.
Thirteen years after a major acquisition involving one of Silicon Valley’s most prominent companies and Lynch’s business, his reputation as one of Britain’s top engineers has come into question. The acquisition is now the focus of a criminal fraud trial where Lynch could potentially be sentenced to up to 25 years in prison if found guilty.
Lynch’s spectacular downfall started with his role as co-founder of Autonomy, a software company that once made him a star in the British tech industry. His accomplishments in business earned him an OBE in 2006 for his contributions. However, his reputation is now at stake as he faces accusations related to the Autonomy acquisition.
Lynch is on a mission to prove his innocence and clear his name from the allegations surrounding the Autonomy deal. The odds are stacked against him as federal prosecutors in the US have a high conviction rate, making it challenging for defendants to win in court.
The trial will focus on the events leading up to HP’s acquisition of Autonomy in a multi-billion dollar deal that Lynch believed would propel the company to new heights in the software industry. However, the aftermath of the acquisition was far from what was expected, leading to a series of legal and financial troubles for Lynch and Autonomy.
As the trial approaches, Lynch is preparing his defense with the help of his legal team, who are working tirelessly to navigate the complex legal landscape surrounding the case. Both sides will present their arguments, and a jury will ultimately determine Lynch’s fate.
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