Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in federal prison after he pleaded guilty to wire fraud and conspiracy charges. The decision of Thursday, Judge Paul Engelmayer, directly relates to Kwon’s criminal activities that caused the 2022 crypto crash that resulted in a loss of almost $40 billion of market cap.
Kwon will be allowed time off from his sentence for the period he has already been in custody in the U.S. and for the 17 months during which he was detained in Montenegro before his transfer, which is expected to take place in December 2024.
Victims Share Impact of Financial Losses
To decide on the sentence, Judge Engelmayer listened to the stories of six victims, who spoke out among the roughly 16,500 people whose Kwon’s actions had affected. Tatiana Dontsova said that she had sold her Moscow apartment in order to invest with Kwon, but she ended up losing $81,000 and becoming homeless after her investment went down.
The judge found both the prosecution’s proposal of 12 years and the defense’s suggestion of 5 years insufficient to the severity and extent of the crime. Engelmayer pointed out that one of the reasons why Kwon’s fraud was so terrible was the fact that he deliberately misled the same group of investors whom he had gained their trust over a period of four years.
The judge cautioned the next generation of cryptocurrency entrepreneurs that if they commit fraud, they will be given hefty prison sentences and will lose their personal freedom for long periods.
Reports say Kwon might be sent back to South Korea to serve the rest of his prison time after only half of his sentence, and there, additional charges could increase his jail time by 40 years. His situation is compared to various celebrities’ stories of cryptocurrency-related crimes, such as Sam Bankman-Fried getting 25 years in prison and Alex Mashinsky being sentenced to 12 years for similar crimes.
At the hearing, Kwon apologized, saying he has thought over his actions for a long time and he is devastated by the fact that investors have suffered. The Terraform co-founder recalled being away from his family for three years and said that he would like to serve his sentence in his country.
Judge Engelmayer remarked that without Kwon’s plea of guilty and his cooperation with the investigation by the federal authorities, his sentence would have been longer.
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