Three years after crypto bankruptcy: Do Kwon sentenced to 15 years in prison
After an agreement with the public prosecutor's office, the founder of TerraUSD could hope for a lower penalty. However, the court did not go along with this.
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Do Kwon, the former head of the cryptocurrency company Terraform Labs, has been sentenced to 15 years in prison by a US court for fraud. This is three years more than the prosecution had requested after the South Korean reached an agreement with the judiciary in late summer. According to the responsible public prosecutor's office in New York, Kwon must also forfeit more than 19 million US dollars, which had been negotiated in advance. Kwon defrauded "on an epic scale with intergenerational consequences," the BBC quotes the prosecutor. In the history of federal prosecution, few have caused as much damage as Kwon.
Dramatic crypto bankruptcy
Do Kwon's Terraform Labs was responsible for TerraUSD, the world's fourth-largest so-called stablecoin. These are cryptocurrencies that peg their price to another value, such as the US dollar. One unit of the coin must then always be worth one US dollar. Terraform Labs tried to ensure this through a so-called algorithmic peg and did not hold sufficient reserves. In May 2022, the value of TerraUSD crashed from around 0.99 US dollars to about 0.01 US dollars. Dozens of billions of US dollars in market capitalization were lost, and many cryptocurrencies subsequently lost significant value.
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After the South Korean judiciary initiated investigations against Terraform and issued an arrest warrant, the CEO of Terraform Labs fled abroad. The US judiciary and the stock exchange supervisory authority also investigated the South Korean. Kwon was arrested upon entering Montenegro with forged papers and, after a long back and forth, was finally extradited to the USA. Earlier this year, he pleaded guilty to the charges and entered into negotiations with the US judiciary. As a result, the prosecution had only requested twelve years in prison, but the court exceeded this.
(mho)
