NEW YORK: Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion in 2022, is set to be sentenced in New York federal court on Thursday for fraud and conspiracy.
Kwon, 34, who co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna currencies, previously pleaded guilty and admitted to misleading investors about a coin that was supposed to maintain a steady price during periods of crypto market volatility.
Kwon was one of several cryptocurrency moguls to face federal charges after a slump in digital token prices in 2022 prompted the collapse of a number of companies.
U.S. District Judge Paul A. Engelmayer will hand down the sentence at a hearing in Manhattan set to begin at 11 a.m. local time (1600 GMT).
Prosecutors have asked for a sentence of at least 12 years in prison, saying the crash of Kwon’s Terra cryptocurrency caused billions of dollars in losses and triggered a cascade of crises in the crypto market.
Kwon’s lawyers have asked that he be sentenced to no more than five years so he can return to South Korea to face criminal charges.
Prosecutors charged Kwon in January with nine criminal counts for securities fraud, wire fraud, commodities fraud and money laundering conspiracy.
Kwon was accused of misleading investors in 2021 about TerraUSD, a so-called stablecoin designed to maintain a value of $1.
Prosecutors alleged that when TerraUSD slipped below its $1 peg in May 2021, Kwon told investors a computer algorithm known as “Terra Protocol” had restored the coin’s value.
Instead, Kwon arranged for a high-frequency trading firm to secretly buy millions of dollars of the token to artificially prop up its price, according to charging documents.
Kwon pleaded guilty in August to two counts, conspiracy to defraud and wire fraud, and apologized in court for his conduct.
“I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg,” Kwon said. “What I did was wrong.”
Kwon agreed in 2024 to pay $80 million as a civil fine and be banned from crypto transactions as part of a $4.55 billion settlement he and Terraform reached with the U.S. Securities and Exchange Commission.
He also faces charges in South Korea. As part of his plea deal, prosecutors will not oppose Kwon’s potential application to be transferred abroad after serving half his U.S. sentence.