Do Kwon sentenced to 15 years in prison for the collapse of US$ 40 billion of Terra

Source: PortaldoBitcoin Original Title: Do Kwon sentenced to 15 years in prison for the collapse of US$ 40 billion of Terra (LUNA) Original Link: Terraform Labs founder Do Kwon was sentenced to 15 years in prison on Thursday (11), after the collapse of US$ 40 billion in the UST and LUNA cryptocurrencies more than three years ago.

Before the sentence was announced, U.S. district judge Paul Engelmayer described this amount as “alarming,” even for the Southern District of New York, where some of the biggest financial crimes in history have been tried.

The 33-year-old South Korean, who pleaded guilty to a series of fraud charges in August, committed “exceptionally serious” fraud, Judge Engelmayer stated, adding: “You chose to lie.”

Judge Engelmayer described Kwon’s now-infamous social media guarantees, including “Deploying more capital – steady lads”, as devastating for investors. He also highlighted how Kwon claimed he “does not debate with the poor.”

Do Kwon’s false promises

At one point, Judge Engelmayer compared Kwon to a cult leader who exploits victims’ trust. The sentence was read in a Manhattan court, where victims recounted how the Terra ecosystem collapse affected their lives.

A man from Ukraine told Judge Engelmayer how he lost nearly US$200,000 when Kwon’s algorithmic stablecoin collapsed in May 2022. Kwon’s claims gave him confidence that 17 years of economics were “safe,” the man added, despite the risks associated with the 20% yields offered by Terra’s yield protocol.

Federal prosecutors had requested a 12-year sentence for Kwon, arguing that he built a financial world based on lies. Kwon used manipulative and deceptive techniques to deceive investors about aspects of Terraform’s business.

Kwon’s lawyers requested that his sentence be limited to five years in prison. As part of the plea agreement, Kwon will forfeit US$19 million, as well as some of his properties.

Kwon, wearing a yellow jumpsuit, expressed remorse to Judge Engelmayer, echoing passages from a previous letter in which he took responsibility for causing widespread suffering.

Kwon admits guilt

“Guilt should fall on me,” Kwon said. “I failed to operate the system properly. I want to prevent other cryptocurrency founders from being in my position now.”

At the same time, Kwon said it has been three years since he last saw his family, expressing a desire to serve part of his sentence in his home country. Prosecutors agreed to allow Kwon to serve the second half of his sentence in South Korea.

Before the sentence, Judge Engelmayer showed frustration with prosecutors for submitting a batch of Terra community letters the night before. The volume of feedback led him to cancel “a celebratory judicial function,” he added.

The failure of the Terra ecosystem was a significant moment for the sector in 2022, triggering a series of collapses that culminated in the bankruptcy of an important exchange months later. Instead of being backed by liquid assets, Terra’s UST stablecoin relied on trading incentives to maintain parity at US$1 — but ultimately failed.

Last April, Terraform Labs and Kwon were held responsible for civil fraud. Months later, they agreed to pay US$4.5 billion as part of a settlement with the U.S. Securities and Exchange Commission. The next day, the company began its dissolution process.

At that time, Kwon was in custody in the Balkan country of Montenegro, amid a long extradition dispute. A year earlier, he had been arrested attempting to travel with a forged passport.