It is official: on December 11, a New York district court handed down the sentence to the founder of the collapsed Terra blockchain network. Judge Paul Engelmayer described the case as an exceptionally serious instance of fraud, citing systematic misrepresentation toward investors.
The court highlighted as particularly damaging Kwon’s public assurances regarding the alleged stability of the algorithmic stablecoin TerraUSD (UST), as well as promises of roughly 20% annual returns through the Anchor protocol.
The sentence exceeded the prosecution’s request, which had called for 12 years in prison. Kwon’s defense team, by contrast, argued for a maximum sentence of five years.
In addition to the prison term, the South Korean national has been ordered to pay a $19 million fine and surrender certain real estate assets. He will be allowed to serve the second part of his sentence in his home country.
In August, Do Kwon pleaded guilty to two counts of fraud and waived his right to a full trial. These charges were part of a broader set of nine allegations.
In court, the 34-year-old entrepreneur expressed remorse.
“The responsibility lies entirely with me,” he said, adding that he hopes to serve as a warning to other crypto founders.
The collapse of the Terra ecosystem in May 2022 is considered one of the most devastating events in crypto history. According to various estimates, investors lost more than $40 billion.
Through Terraform Labs, Do Kwon issued, among other products, the UST stablecoin, whose failure ultimately brought down the entire system. The collapse is widely seen as the starting point of a massive wave of insolvencies across the industry, culminating in the failures of major players such as FTX and Celsius.