A former cryptocurrency entrepreneur who caused two digital currencies to crash, causing losses of around A$40 billion ($29.9 billion), has been sentenced to 15 years in prison by a New York judge for “epic” fraud.
Kwon Do-do, a South Korean national, was the co-founder of Singapore-based Terraform Labs, which developed the TerraUSD and Luna digital coins.
Kwon admitted that he had misled investors about TerraUSD, a so-called stablecoin that should maintain its value against the U.S. dollar.
He was one of several bosses in the cryptocurrency industry indicted in the U.S. after digital tokens crashed in 2022, sending several companies into bankruptcy.
U.S. District Judge Paul A. Engelmaier, who handed down the sentence, said the Stanford graduate repeatedly lied to investors who trusted him with their money.
“This is a massive, generational fraud,” he said at a court hearing in Manhattan on Thursday.
“Few frauds in the history of federal prosecutions have caused as much damage as yours.”
Kwon, who pleaded guilty to conspiracy to defraud and wire fraud last August, expressed his remorse to the judge.
“I’ve spent almost every waking moment over the past few years thinking about what I could have done differently and what I can do now to make things right,” he said.
Prosecutors alleged that when TerraUSD fell below the $1 peg in May 2021, Kwon told investors that a computer algorithm had restored its value.
Instead, Kwon arranged for a trading company to secretly purchase millions of dollars in coins to artificially increase their value, court documents show.
