"He also apologized. Prosecutors sought a 12-year sentence. On Thursday, Judge Paul Engelmayer of the Southern District of New York decided 15 years was more appropriate because Kwon's fraud was of "epic, generational scale." While US courts pursued Kwon, the Securities and Exchange Commission worked to wind up Terraform labs, and in 2024 secured $4.5 billion to share with creditors and authorities."
"Attempts to shore up the ecosystem by buying $3.5 billion of bitcoin didn't work, and $40 billion of value evaporated in a puff of blockchain reverie. Kwon is a South Korean national, Terraform Labs operated out of Singapore, and the collapse of UST burned investors across the globe. Authorities in many nations therefore wanted a word with Kwon, who in late 2022 left Singapore and disappeared."
Do Kwon founded Terraform Labs and created the Terra USD (UST) token, promoted as a stablecoin pegged to one US dollar through a paired token, Luna, and smart contracts. The mechanism failed in May 2022 when UST fell from $1.00 to $0.09, wiping out roughly $40 billion in market value despite purchases of $3.5 billion in bitcoin. Kwon fled Singapore, was later arrested in Montenegro using a fake passport, and extradited to the United States. He pleaded guilty to commodities, securities, and wire fraud, apologized, and received a 15-year prison sentence. The SEC recovered $4.5 billion, about ten percent of losses. Victim statements describe retirees and other investors suffering severe financial harm.
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