Cryptocurrency mogul Do Kwon sentenced to 15 years in prison

South Korean encryption Businessman and fraudster prosecuted To Kwon A US federal judge in the Southern District of New York sentenced him to 15 years in prison on Thursday.

Kwon looked solemn as he entered the courtroom, his head bowed. He was wearing a bright lime prison jumpsuit over a long-sleeved shirt, with handcuffs around his waist and hands.

In August, Kwon plead guilty To defraud investors who purchased cryptocurrencies issued by his company Terraform Labs. In May 2022, crash These currencies wiped out $40 billion and sent the cryptocurrency economy into chaos that led to the bankruptcy of many other companies.

“Kwon’s fraud was massive in scope, permeating virtually every aspect of Terraform’s alleged business,” US prosecutors wrote in a filing. Final court filing. “His rampant lies have left a trail of financial devastation in their wake.”

The crimes to which Kwon pleaded guilty carry a maximum penalty of 25 years in prison. Before the hearing, prosecutors filed a motion for a twelve-year prison sentence.

Kwon started Terraform in 2018, alongside co-founder Daniel Chen. Two years later, the company announced plans to launch TerraUSD (UST), a stablecoin whose value is supposedly tied to the US dollar. By algorithm. The algorithm will effectively link UST to a second coin issued by LUNA. One dollar worth of LUNA can be exchanged for one dollar worth of UST, and vice versa. If the value of UST falls below $1, traders will be incentivized to buy LUNA until the target value is restored.

“It was a very interesting and new mechanism,” Noelle Acheson, an analyst who previously worked at cryptocurrency brokerage Genesis, told WIRED last year. “A lot of smart people think it will work.”

In May 2022, the price stabilization system began to take effect. At the merchants It sold large quantities of USTIt backed away from its peg to the dollar, which led to panic selling It drove the price practically to zero. In a The now infamous tweetKwon tried to stop the sell-off, writing: “Deploy more capital – steady boys.” But the value of UST and LUNA plummeted, wiping $40 billion from the market.

The contagion of the incident contributed to the collapse of the hedge fund Three capital sharesfollowed by cryptocurrency lenders Digital travel, BlockFiand Genesis. In a Roundabout RoadYou have created the conditions for this Destruction of the FTX crypto exchangeby causing lenders to call hundreds of millions of dollars in loans made to sister company FTX. The sister company repaid the loans using FTX client funds, deepening the hole in the exchange’s balance sheet.

After the incident, Kwon fled his apartment in Singapore to the Balkans. In March 2023, it was He was arrested by authorities in Montenegro After trying to use a fake passport to board a plane to the United Arab Emirates, which does not have an extradition treaty with the United States. Then a fight broke out over which country would be allowed to extradite him – the United States or Kwon’s native South Korea.