Do Kwon, Architect of $40 Billion Crypto Collapse, Awaits Sentencing

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Do Kwon, the founder behind the catastrophic failure of the TerraUSD and Luna cryptocurrencies, faces sentencing today in a New York courtroom. The South Korean entrepreneur pleaded guilty to fraud and conspiracy charges related to the $40 billion wipeout of his digital assets in 2022.

Kwon, who co-founded Terraform Labs, admitted to deceiving investors about the stability and mechanics of the TerraUSD stablecoin. His admission detailed how he misled the market about a token purportedly designed to maintain a fixed value during industry turbulence.

His sentencing marks a pivotal moment in a series of legal reckonings for crypto executives following the 2022 market downturn. That slump exposed rampant fraud and poor risk management, leading to the failure of several major industry companies.

The sentence will be delivered by US District Judge Paul A. Engelmayer at a hearing in Manhattan. Prosecutors for the US government are seeking a substantial prison term, arguing Kwon’s actions inflicted immense financial damage and initiated a broader market contagion.

In their request for a sentence of at least 12 years, prosecutors emphasized the scale of the losses and the downstream crises triggered by Terra’s collapse. Kwon’s defense team has countered, seeking a term of no more than five years to facilitate his eventual extradition to face separate charges in South Korea.