First Sam Bankman-Fried was sentenced to prison for his crypto crime. Now, it’s the turn of Do Kwon, who is widely regarded as crypto’s most infamous fraudster after Bankman-Fried. On Thursday, the 34 year-old was sentenced to 15 years in prison, after being charged with misleading investors and inflating the value of his company’s cryptocurrencies known as Terra and Luna.
At his sentencing hearing in New York, the judge chastised Kwon, suggesting he had succumbed to the worst elements of an industry known for get-rich-quick swindles. “You have been bitten by the crypto bug and I don’t think that’s changed. You must be incapacitated. If not for your guilty plea, my sentence would have been higher,” said U.S. District Judge Paul Engelmayer, according to a tweet from Inner City Press, which provides reliable reporting on court proceedings.
The sentencing is the final fallout from 2022, when Kwon’s stablecoins TerraUSD and Luna both suddenly collapsed in value, which led to massive losses for investors. Kwon was charged with committing wire fraud and conspiring to commit securities fraud and commodities fraud, according to a statement by the Department of Justice.
After his company went bankrupt in 2022, Kwon was on the run for months. He fled South Korea and later Singapore after he was wanted by both the United States and South Korea. He was arrested in March 2023 in Montenegro after he was found in possession of a fake Costa Rican passport. Late last year, Montenegro extradited Kwon to the United States.
In a 2024 suit by the Securities and Exchange Commission, the regulator found Terraform and Kwon liable for civil fraud. A jury then determined that Kwon and Terraform misled investors. Kwon and Terraform lied about how the company’s blockchain technology was using Chai, a Korean payment application, to make transactions. Kwon and Terraform had also claimed that the stablecoin was algorithmically pegged to the US dollar, which jurors found to be misleading to investors.
Kwon agreed to pay more than $200 million and Terraform agreed to pay more than $3.5 billion in order to wind down the firm.
In August, Kwon pleaded guilty to conspiracy and wire fraud. “I knowingly agreed with others to defraud, and did in fact defraud, purchasers of cryptocurrencies issued by my company, Terraform Labs,” Kwon said at the time. “What I did was wrong and I want to apologize for my conduct. I take full responsibility.”
Kwon is one of several high profile crypto figures sentenced to jail in the last couple of years. Sam Bankman-Fried, the founder of FTX, was sentenced to 25 years in prison in March of last year. A month later, Changpeng Zhao, co-founder Binance, was sentenced to four months in prison. President Donald Trump has since pardoned Zhao, while Bankman-Fried remains behind bars.
